Practice Areas & Industries: Sullivan & Cromwell LLP

Practice/Industry Group Overview

The Strategic Finance Group at Sullivan & Cromwell specializes in developing and executing debt and hybrid financings, particularly those that fund transformative events in the life span of a company - mergers, acquisitions, dispositions, spin-offs, re-capitalizations, insolvencies and restructurings.

The S&C Approach

S&C's strategic financing transaction teams bring together lawyers with expertise in equity and debt capital markets, M&A, private equity, hedge funds, commercial real estate, bank lending, banking, tax and bankruptcy. The strength of S&C's strategic finance practice is inseparable from the strength of our other practice areas, although several of our partners have focused on leveraged financing and commercial lending transactions as the foundation of their practices.

Our practice crosses product lines, industries, leverage levels and credit strengths. Lawyers within the Firm have extensive experience with debt, derivatives, capital markets and hybrid products.

Sullivan & Cromwell advises the full range of principals and participants in strategic financing transactions, including: lending syndicates, underwriters, single lenders, single borrowers and borrowing groups, purchasers or sellers of loan participations or assignments, financial advisors, investors, private equity funds, hedge funds and industrial companies. We represent issuers and underwriters of public investment grade and high yield debt and borrowers and lenders across the range of debt products. We are often consulted by providers of debt financing to assist in the development and innovation of financial products and by borrowers to advise in connection with a fundamental change in their capital structure or an initial foray into a new part of the debt markets.

Regions and Industries

S&C is a global firm. Our Strategic Finance Group, like our other core practice areas, serves clients around the world. Every office in the Firm has one or more partners who practice in this area and we frequently work with one another.

Recognitions

Sullivan & Cromwell partners involved in strategic finance have been recognized as leaders in their field by the following publications in the past five years:

The Best Lawyers in America
Chambers USA
Euromoney, Guide to the World's Leading Project Finance Lawyers
Lawdragon 500 Leading Lawyers in America
The Los Angeles Area's Best Lawyers
New York Super Lawyers
Who's Who Legal: California

Selected Clients

Selected recent clients served by S&C's Strategic Finance Group include:

• Abertis Infraestructuras (Spain; Construction Services)
• Altor (Nordic; Private Equity)
• Angiotech Pharmaceuticals (Canada; Biotechnology & Drugs)
• Barclays Capital (U.K. and U.S.; Banking and Principal Investments)
• Brinker International (U.S.; Restaurants)
• Canada Pension Plan Investment Board (Canada; Private Equity)
• Collective Brands (formerly Payless ShoeSource) (U.S.; Retail, Apparel)
• CONMED Corporation (U.S.; Medical Technology)
• Duquesne Light (U.S.; Electric Utilities)
• EchoStar (U.S.; Broadcasting & Cable T.V.)
• Fender Musical Instruments, Inc. (U.S.; Household Audio and Visual Equipment)
• Goldman Sachs Bank (U.S.; Banking)
• Goldman Sachs Credit Partners (U.S. and U.K.; Financial Services and Principal Investments)
• Hovensa (Virgin Islands; Oil & Gas)
• IPC Holdings (Bermuda; Insurance)
• J. Aron & Co. (U.S.; Financial Services)
• J.C. Flowers & Co. (U.S.; Private Equity)
• Morgan Stanley Senior Funding (U.S.; Financial Services)
• Morgans Hotel Group (U.S.; Hotels and Motels)
• NXP B.V. (The Netherlands; Semiconductors and Related Devices)
• Ontario Teachers' Pension Plan Board (Canada; Private Equity)
• PMI Group (U.S.; Insurance)
• Rainbow National Services, a subsidiary of Cablevision Systems Corporation (U.S.;
• Broadcasting & Cable T.V.)
• Rhône Capital (U.S.; Private Equity)
• Royal Philips Electronics (The Netherlands; Semiconductors and Related Devices)
• Swisscom AG (Switzerland; Telecommunications Services)
• UnitedHealth Group (U.S.; Healthcare Services)
• VeriFone Inc. (U.S.; Electronic Payment Systems)
• Versa Capital Management, formerly known as Chrysalis Capital Partners, L.P. (U.S.; Private Equity)
• Vornado Realty Trust (U.S.; Real Estate)
• Wells Fargo Foothill (U.S.; Banking)
• Whitehall Funds (U.S.; Investment Services)

Selected Acquisition Financings

Following are selected recent highlights of our acquisitions-related financing experience:

• S&C represented Collective Brands, Inc. (formerly Payless ShoeSource, Inc.) in its acquisition of Stride Rite Corporation and in the related US$ 1.1 billion financing (completed August 2007).
• S&C represented Swisscom AG/Swisscom Italia S.r.l. in its acquisition of Festweb S.p.A. and in the related CHF8.1 billion financing (completed May 2007).
• In 2007 (through August), partners in the Firm's London and Frankfurt offices worked on the acquisition financings by Whitehall Funds for the acquisitions of the following: shopping malls (from Kaufland, January 2007), a portfolio of commercial real estate (from Eurocastle/Fortress, June 2007), a portfolio of commercial real estate in Munich (July 2007) and a shopping mall in Düsseldorf (August 2007). S&C represented Whitehall Funds; all deal values are undisclosed.
• S&C acted in the US$ 1.645 billion financing for the acquisition of Duquesne Light by a consortium led by Macquarie Securities (USA) Inc., which included a US$ 200 million revolver, a US$ 1.170 billion Tranche A term loan and a US$ 200 million Tranche B term loan for Duquesne Light Holdings and a US$ 75 million revolver for Duquesne Light Company (representing Macquarie in the acquisition and the borrowers, Duquesne Light Holdings and Duquesne Light Company, in the financing; financing documents closed December 2006).
• In March 2006 one of S&C's Canadian clients, Angiotech Pharmaceuticals, acquired the stock of American Medical Instruments Holdings, Inc., a leading independent manufacturer of specialty single-use medical devices, for approximately US$ 785 million in cash. The acquisition financing included a US$ 250 million high yield notes offering and a US$ 425 million senior secured credit facility consisting of a US$ 350 million term facility and a US$ 75 million revolving credit facility. S&C lawyers in Los Angeles and New York advised Angiotech on all aspects of the transaction, integrating our expertise in M&A, capital markets and strategic financing.
• S&C acted in the €5 billion acquisition of all the shares in SANEF, the French toll road operator, by Holding d'Infrastructures de Transport S.A.S. (a company formed at the direction of Abertis Infraestructuras, S.A., AXA République, Caisse des Dépôts et Consignations, CNP Assurances, PREDICA and Société Foncière, Financière et de Participations) from the French state and the French state-owned company, Autoroutes de France. This transaction, in which S&C represented Abertis, was one of the world's largest transport financings in 2006 (completed February 2006).

Many acquisition financings in which the Strategic Finance Group is engaged involve private equity:

• S&C is representing Goldman Sachs and Ethos Private Equity in the ZAR 9.85 billion (approximately US$ 1.37 billion) acquisition of South African casino operator Gold Reef Resorts by an investment consortium that includes the parties S&C is representing as well as certain Broad-Based Black Economic Empowerment groups and members of Gold Reef management. This represents the first significant leveraged buyout since the tightening of the credit markets and is the second-largest private equity deal in South Africa (announced September 2007).
• S&C represented subsidiaries of Ontario Teachers' Pension Plan Board ("OTPPB"), as borrowers, in the US$ 2.4 billion financing for the acquisition by OTPPB of four North American container terminals located in the Vancouver and New York areas from Orient Overseas (International) Limited (completed in January 2007 [three terminals] and June 2007 [the fourth terminal]).
• S&C represented Canada Pension Plan Investment Board, as a member of an investor consortium under the direction of which Osprey Acquisitions Limited was formed and subsequently purchased AWG plc for US$ 4.1 billion (closed November 2006).
• In September 2006 Dutch electronics giant and long-standing S&C client Koninklijke Philips Electronics spun off its semiconductor business, now named NXP B.V., and subsequently sold an 80.1% interest in NXP to a private equity consortium consisting of Kohlberg Kravis Roberts & Co., Silver Lake Partners and AlpInvest Partners N.V. As counsel to Philips, S&C managed and executed a dual-track M&A and IPO process to preserve optionality for Philips to proceed with either, depending on market conditions. In addition to advising Philips as seller, S&C was engaged to advise NXP on the strategic financings for the buyout transaction. The financing for the sale involved a €4.5 billion bridge facility that was subsequently refinanced by a dual-currency, five-tranche high yield notes offering and a €500 million revolving credit facility. The financing package was precedent-setting for the European market based on its size, the amount of floating rate debt raised and the use of incurrence based covenants for the bridge, high yield and revolver. The team comprised lawyers from S&C's London and New York offices and S&C advised with respect to U.S., English, French and German law. S&C was able to cover all aspects of the complex, multi-jurisdiction transaction, from the potential IPO to the private equity auction and strategic financings.
• S&C represented Canada Pension Plan Investment Board, as a member of the investor consortium, in the US$ 1.8 billion financing for the acquisition of Chile's largest electricity transmission company HQI Transelec by an investor consortium. This was the largest acquisition financing of a Latin American target in 2006 (completed June 2006).

Selected Insolvency Related Financings

Selected recent highlights of our insolvency related financing experience include the following:

• S&C acted as counsel to Morgan Stanley Senior Funding, Inc. as term agent, sole arranger and sole bookrunner in connection with its US$ 270 million debtor in possession financing for Allied Holdings and Allied Systems, Inc. (ND GA) (refinanced March 2007).
• S&C acted as counsel to Morgan Stanley Senior Funding, Inc. in a US$ 790 million exit financing for Foamex International Inc. that included a senior secured revolving credit facility, and first and second lien term loan facilities (closed February 2007).S&C acted as counsel to Adelphia Communications, Inc. in the sale of its business to Time Warner, Inc. (confirmation effective February 2007).
• S&C acted as counsel to Morgan Stanley Senior Funding, Inc. as sole lead arranger, sole bookrunner, and sole agent in US$ 130 million debtor in possession financing for Silicon Graphics, Inc. (SDNY June 2006) and as lead arranger, bookrunner and administrative agent in US$ 115 million exit facility for Silicon Graphics, Inc. (SDNY October 2006).
• S&C acted as counsel to Morgan Stanley Senior Funding, Inc. as co-lead arranger in US$ 1.9 billion debtor in possession financing for Delta Airlines (closed March 2006).

Selected Other Financings

Our Firm's expanded leveraged finance group also acts on behalf of borrowers and lenders outside the contexts of M&A and insolvency. The following are selected recent financings:

• In August 2007 a US$ 1.6 billion monoline-wrapped financing to build a stadium for the New York Giants and Jets was completed. This represents the largest total initial borrowings ever in the sports industry and the first time that a new NFL stadium will be constructed to serve as the home field for two competing NFL teams. S&C represented the Mara and Tisch families, owners of the Giants, in connection with their approximately US$ 800 million portion of the stadium financing.
• In July 2007 German automobile parts manufacturer HONSEL GmbH, owned by Ripplewood and other private equity investors, refinanced its existing bank facilities. The financing, for which S&C advised arrangers and lenders Goldman Sachs International and Deutsche Bank AG as to French, German, English and U.S. law, involved senior, mezzanine and PIK (with warrants) facilities (value undisclosed).
• S&C represented Fender Musical Instruments in its US$ 285 million financing (closed in June 2007).
• S&C represented ESCO Corporation in connection with a US$ 110 million secured revolver provided by Bank of America and a US$ 300 million fixed and floating notes offering arranged by Goldman Sachs and Morgan Stanley (closed December 2006).
• S&C represented the lender in a US$ 5.6 billion revolving credit facility for CarrAmerica Realty (closed July 2006).
• Selected other clients recently served by S&C's Strategic Finance Group include restaurant operator Brinker International; medical technology company CONMED Corporation; satellite service provider EchoStar; petroleum refining company Hovensa; reinsurance company IPC Holdings; Morgans Hotel Group; insurance company PMI Group; Rainbow National Services, a subsidiary of Cablevision Systems Corporation; electronic payment systems developer VeriFone Inc.; Vornado Realty Trust; and healthcare service company UnitedHealth Group.

Contacts for the Strategic Finance Practice

For more information on Sullivan & Cromwell's strategic finance practice, please contact Hydee R. Feldstein, Erik D. Lindauer or one of these strategic finance lawyers:

UNITED STATES: Los Angeles Office

Hydee R. Feldstein

UNITED STATES: New York Office

Robert E. Buckholz, Jr.
Jay Clayton
Andrew G. Dietderich
Robert W. Downes
William G. Farrar
Sergio J. Galvis
Erik D. Lindauer
Christopher L. Mann
Alan J. Sinsheimer
Andrew D. Soussloff

UNITED STATES: Palo Alto Office

Scott D. Miller

UNITED STATES: Washingon D.C. Office

Eric J. Kadel, Jr.
Dennis C. Sullivan

EUROPE: Frankfurt Office

Kristina Czerniecki
Konstantin Technau

EUROPE: London Office

Craig D. Jones
S. Neal McKnight

EUROPE: Paris Office

Gauthier Blanluet
Dominique Bompoint
Richard Vilanova

ASIA PACIFIC: Hong Kong Office

William Y. Chua
Michael G. DeSombre

ASIA PACIFIC: Melbourne Office

John E. Estes

ASIA PACIFIC: Tokyo Office

Stanley F. Farrar