Clayton E. Parker, K&L Gates

Clayton E. Parker, a Miami-based partner of K&L Gates, helped Miami-based mobile phone distributor Brightstar Corp. negotiate $1.87 billion of financing transactions last year under tight time constraints.

The biggest transaction was a $1.32 billion senior secured credit facility with 17 banks, which replaced a $600 million facility led by PNC Bank. The credit facility agreement with the 17 banks closed June 28, 2013. “We did this from start to finish in about six weeks,” Parker said.

In addition to the increased size of the credit facility, the challenges for Parker and his team at K&L Gates also included the appointment of Bank of America as co-administrative agent and co-collateral agent together with PNC, which had been the lead bank of Brightstar since 2004.

“A number of new banks came in because Bank of America is a participant in the facility,” Parker said. “It was a real challenge, because having two administrative agents is having two sets of rules and having two sets of committees to go through before you even go out and approach the committees of the other 15 remaining banks. So there was a lot of negotiation between PNC and Bank of America.”

Parker said part of the negotiation included successful efforts to liberalize the original terms of the credit facility to allow for increased investments by Brightstar in business acquisitions. “Brightstar is such a rapidly expanding company that getting the banks to be able to fund that rapid expansion is always a challenge,” he said.

Parker also provided legal guidance for a $250 million offering of Brightstar bonds concurrently with the negotiation of the expanded senior credit facility, which required careful coordination of the bond underwriters and the banks to ensure that the terms of both financings didn’t conflict with each other. The bond offering closed last July 31.

While working on the bond offering and the senior credit facility, Parker also counseled Brightstar on a $100 million syndicated letter of credit facility, led by Deutsche Bank, which closed last June 10—one month after the parties executed a “mandate letter,” or term sheet, for the facility.

In addition, the K&L Gates partner guided a $100 million receivables purchase facility with Standard Bank Plc that closed last Nov. 5. It is a completely restructured version of a similar Brightstar facility that originally closed in 2010.

He helped Brightstar through a three-week negotiation of a $100 million unsecured distribution payables finance credit facility, which closed Dec. 3, 2013, despite interruptions due to the Thanksgiving holiday.

Two Miami partners of K&L Gates, David Baghdassarian and Christopher Tillson, played important roles in the negotiation of the bond deal and the receivables and payables credit facilities. To make sure the deals were closed in a timely manner, “these people gave up their vacations,” Parker said.

FINALISTS:

Akerman trio worked first-of-its-kind REIT for prison operator
William C. Arnhols, Esther L. Moreno and Stephen K. Roddenberry
Akerman

William C. Arnhols, Esther L. Moreno and Stephen K. Roddenberry of Akerman paved the legal path for Geo Group Inc. to become the first real estate investment trust specializing in the development and operation of prisons.

The three Miami partners also helped Boca Raton-based Geo close two offerings of senior notes totaling $550 million and restructure a $1 billion credit facility.

“It was a complex group of transactions that required a lot of work,” Roddenberry said.

The conversion of Geo to a REIT from a C corporation took effect Jan. 1, 2013. The new structure allows a company to avoid federal income tax by paying 90 percent of its earnings as dividends to shareholders. There are “very complex rules that apply to REITs,” and failure to comply with them can “jeopardize that election,” Moreno said.

Geo issued $300 million of 5 1/8 percent senior notes due in 2023, which closed in March 2013. “It was their first offering as a REIT, so it was important that investors understood that,” she said. “It took some education on our part and by the underwriters and placement agents involved to make sure the market was educated on that.”

Akerman also guided Geo to amend and restate the company’s $1 billion senior credit facility, which was completed in April 2013, and “gave them additional borrowing capacity,” said Arnhols, chair of the firm’s banking, lending and restructured finance practice.

“From the closing of the sale of bonds in March to the closing of the restated credit facility, everything needed to happen flawlessly with no hiccups,” he said. “The challenge was to keep everything on a calm, measured pace until the closing.”

The attorneys also guided a $250 million of 5 7/8 percent senior notes due in 2022, which closed last Oct. 3. The offering funded the repurchase and redemption of 7¾ percent senior notes due in 2017.

In addition, the attorneys helped Geo establish an at-the-market equity program, which allows a group of four banks to serve as placement agents for investors buying Geo stock.

“It permits, in effect, a series of many offerings on very short notice to hit the market if there’s a spike in demand [for Geo stock] over a very short period of time,” Roddenberry said.

Greenberg shareholder expedited $1 billion Hard Rock refinancing
Lorne S. Cantor, Greenberg Traurig

Lorne S. Cantor, a Miami-based shareholder of Greenberg Traurig, counseled Hard Rock International on a fast-paced refinancing of corporate debt that involved more than $1.1 billion of securities transactions.

Cantor advised the Orlando-based company on a tender offer to acquire $525 million of outstanding notes and a concurrent offering of new notes totaling $350 million and helped the company secure a new $250 million credit facility.

He said his work on the note offering, credit facility and tender offer took about five weeks from start to finish: “It was an expedited process. … The capital markets at the time were very favorable, and Hard Rock wanted to take advantage of the excellent market conditions.”

Privately held Hard Rock bought back $525 million of notes with floating interest rates due to mature in early 2014. The notes were issued in connection with a leveraged acquisition of the company by the Seminole Tribe of Florida in 2007. “At the time of the acquisition, $525 million was raised to acquire Hard Rock. That’s what was refinanced by this financing,” Cantor said.

Hard Rock paid for the tender offer with proceeds from the offering of $350 million of fixed-rate, 5.875 percent senior notes due in 2021 and by tapping the $290 million secured term loan facility with floating interest rates. “We knew fairly early in the process that this was going to be a deal with both notes and a credit facility,” Cantor said.

The $115 million of proceeds from the note offering and term loan facility that remained after the tender offer were used for working capital and general corporate purposes. Bank of America, Credit Suisse and Merrill Lynch served as the placement agents for the notes and as the lead arrangers for the credit facility.

Hard Rock International has locations in more than 50 countries, including 140 cafes and 18 casino hotels, according to the company’s website. “It’s a very complicated business with operations that span the globe, so putting together the secured credit facility was a complicated task in and of itself,” Cantor said.

He said four other Miami-based shareholders of Greenberg Traurig played key supporting roles in note offering and tender offer by Hard Rock. Manuel R. Valcarcel led the intellectual property team, Charles E. Stiver led the tax team and Mindy B. Leathe oversaw work on employee benefits. In addition, Drew M. Altman was “an integral part of my team for Hard Rock,” Cantor said.

Greenberg duo struck quickly for low interest rate on MasTec debt
Drew M. Altman and Ira N. Rosner
Greenberg Traurig

Drew M. Altman and Ira N. Rosner of Greenberg Traurig helped specialty construction contractor MasTec Inc. issue $400 million of senior notes and retire $150 million of senior notes bearing a substantially higher interest rate.

Altman and Rosner, both Miami-based shareholders of Greenberg Traurig, helped MasTec issue the new notes and retire the old notes concurrently, not sequentially, so the Coral Gables-based company could avoid carrying the old notes for an additional month. “This all saved the company a significant amount of interest,” Altman said. Under the rejected alternative of issuing new notes and then retiring the old ones, “you’re carrying $400 million of new debt plus this $150 million in existing debt, so you’ve got this double-carry for 30 days.”

The $150 million of senior notes due in 2017 had an interest rate of 7.625 percent, and in compliance with the indenture agreement covering the notes, MasTec gave holders 30 days to respond to a tender offer to repurchase the notes.

MasTec conducted the tender offer for the old notes while pursuing its successful offering of $400 million of new 4.875 percent notes due in 2023, which closed March 18, 2013. Holders of $121 million of the old notes responded to the tender offer.

“Effectively, the way it worked out, they [MasTec] were able to buy those notes back on the same day that we closed the $400 million,” Altman said. Proceeds from the offering of the new notes “extinguished that $121 million so that the company was not paying interest on those notes, leaving only the remaining aggregate principal amount, another $29 million outstanding.”

As part of the tender offer for the old notes, MasTec also solicited consent from the holders to call the notes for redemption with three days’ notice, which allowed the company to promptly retire the remaining $29 million of 7.625 percent notes.

Rosner said he and Altman had to work fast to allow MasTec to take advantage of low interest rates in early 2013 and to minimize the chance that a political or financial crisis would push the cost of borrowing substantially higher.

Rosner also said the timing of the offering of 4.875 percent notes was optimal. It helped MasTec become one of only a handful of companies with a non-investment-grade credit rating to issue senior notes in early 2013 at an interest rate below 5 percent.

“It was about a 2.75 percent reduction in rate from the debt that was being refinanced,” he said. “It gave them comfort to increase the size of the deal and to basically issue substantially more debt than they needed to do the refinancing.”