Change Capital Buying Hallhuber

Change Capital Partners has agreed to acquire Hallhuber GmbH, a German maker of women’s clothing and accessories, from Italy’s Stefanel. The deal includes a €25 million up-front payment and a possible €4 million earn-out.

PRESS RELEASE

Change Capital Partners LLP (”Change Capital”), the private equity firm specialising in retail and consumer industries, is pleased to confirm that it has reached agreement to acquire Hallhuber GmbH (“Hallhuber”). Hallhuber, a German women’s wear brand with a distinct positioning of stylish, elegant and distinguished clothes and accessories, is to be acquired from Stefanel, the Italian-listed apparel group, for a purchase price of €25 million plus a €4 million conditional earn-out. The transaction, which will be structured through a German holding company, is expected to close shortly after having obtained clearance from the German fiscal authorities.

The Company’s core business is in Germany (89 POS). It also has operations in Austria (2 POS), the Netherlands (2 POS) and has a co–operation with a distributor in Switzerland. In the latest financial year to end of December 2008, the company reported sales of €58.1m and an EBITDA of €4.9m. Sales have continued to grow and in the first six months of 2009 increased by 13%.

This will be the first acquisition made by Change Capital out of its second fund, CCP II and follows its successful fashion investments in CCP I, in Jil Sander, the iconic luxury German fashion brand and in Republic the fast growing leading multi brand young fashion retailer in the UK.

Stephan Lobmeyr, Managing Director of Change Capital, said today,
“We are delighted to have the opportunity to acquire Hallhuber. We admire greatly what Ms Hallhuber and the rest of the team have already achieved and we are excited at the prospect of working and investing together in the further development of the brand. The business is profitable and we have put in place a prudent capital structure as we want to use the cash generated by the business to open new stores and renew the existing network.”

Susanne Hallhuber, Creative Director of Hallhuber, said today,
“I am thrilled that Hallhuber is again a standalone company and to be working on the ambitious development of the brand with the backing of Change Capital Partners with their deep experience in fashion and retail. I am feeling very optimistic as this transaction will open up new opportunities for Hallhuber.”

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Church’s Chicken Expands

Church’s Chicken, an Atlanta-based quick-service restaurant chain, has acquired 23 former Mrs. Winner’s locations from Famous Recipe Company. No financial terms were disclosed. Friedman Fleischer & Lowe bought Church’s Chicken last month from Arcapita for between $300 million and $390 million. www.churchs.com

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Ontario Teachers Buys CTV’s Stake in Maple Leaf Sports

TORONTO (Reuters) - The Ontario Teachers’ Pension Plan said on Thursday it is buying a 7.7 percent stake in Maple Leaf Sports and Entertainment from privately held media company CTVglobemedia.

Buying out the last of CTVglobemedia’s investment means Teachers will have a 66 percent stake in MLSE, Canada’s largest sports company. Financial terms weren’t disclosed.

MLSE — which is also privately held — owns and operates the National Hockey League’s Toronto Maple Leafs, the National Basketball Association’s Toronto Raptors and Toronto FC of Major League Soccer.

It also owns several sports and concert venues, including the Air Canada Centre.

Ivan Fecan, CTVglobemedia’s chief executive, said his company is exiting the investment “profitably” and added the proceeds from the sale will be used to pay down debt.

CTVglobemedia held more than 15 percent of MLSE before selling 7.7 percent to MLSE Chairman Lawrence Tanenbaum. That deal was completed in February.

With his 20.5 percent stake, Tanenbaum is MLSE’s second largest shareholder. (Reporting by Wojtek Dabrowski; editing by Rob Wilson)

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Readers Digest: Lenders On Board with Restructuring Plan

NEW YORK (Reuters) - Reader’s Digest Association Inc said on Thursday that lenders representing almost 80 percent of its senior secured debt have agreed in principle to the magazine publisher’s restructuring plan.

The media company, known for its namesake magazine, also said that 70 percent of investing institutions signed on to the terms of its proposal to lower its debt.

Reader’s Digest had said on Monday it planned to file for Chapter 11 bankruptcy protection within 15 days for its U.S. businesses as part of a prearranged plan with lenders to cut debt by 75 percent to $550 million from the current $2.2 billion. It also said on Monday it expected to conclude the restructuring process within 45 to 90 days.

Last week, Reader’s Digest, which was bought in 2007 by an investor group led by Ripplewood Holdings LLC, chose not to make a $27 million interest payment on notes due in 2017, choosing to use a 30-day grace period to negotiate with lenders.

The plan would also allow the company to reduce its annual interest payments on the remaining debt to less than $80 million from about $145 million

Reader’s Digest, based in Pleasantville, New York, has said it is the largest selling magazine in the world. It has offices in 45 countries and sells books, magazines, recorded music collections and home videos.

Ripplewood will have no ownership stake going forward either in the United States or internationally.

Reader’s Digest is the latest media company to be hurt by an economic slowdown that has cut ad spending and hampered companies’ abilities to repay debt.

Under the plan, the company will work with lenders to swap a portion of its $1.6 billion in senior secured debt for equity, and transfer company ownership to the lender group.

The agreement, which is subject to court approval, also includes a commitment from some members of the senior lender group, led by JP Morgan Chase (JPM.N), to provide $150 million in debtor-in-possession financing, which would help fund operations during the reorganization. (Reporting by Chelsea Emery and by Phil Wahba, editing by Tim Dobbyn)

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Who Is The Ukrop’s Private Equity Bidder? Not the Likely Suspects

Earlier this week trade publication Supermarket News reported that the auction for Virginia-based supermarket Ukrop’s Super Markets may go to a private equity bidder. Strategic bidders Harris Teeter, Delhaize Group, and Ahold had been outbid by a buyout firm, the publication reported.

The company was first reported to be on the block in July. Goldman Sachs is advising Ukrop’s on the auction, a source told peHUB.

The population of PE shops which would invest in a 28-store grocery company is relatively small. Past investors in the industry include Leonard Green Partners, Wellspring Capital Partners, Willis Stein & Co., Apollo Management, and naturally, Yucaipa Cos., the fund operated by supermarket magnate Ron Burkle.

peHUB has learned that, from our shortlist of logical private equity bidders, Leonard Green Partners, Wellspring Capital Partners, and Willis Stein have not participated in the auction. That leaves Yucaipa Cos. and Apollo Management. However Apollo management, which, in the buyout boom, purchased companies for greater than $5 billion, is likely to consider Ukrop’s below its size range. Meanwhile, the majority of Yucaipa’s investments have been closer to its headquarters in California. So who does that leave?

The company, which had sales of around $590 million last year, has a loyal following in Richmond, Va. It was founded in 1937 and remains under family management. The company is known for not selling alcohol and closing its doors on Sundays.

A Ukrop’s spokesperson was not immediately available to return calls for comment.

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Wincove Capital Buys GI Plastek Wolfeboro

Wincove Capital has acquired GI Plastek Wolfeboro LLC, a Wolfeboro, N.H.-based maker of plastic injection molded products. No financial terms were disclosed.

PRESS RELEASE

Wincove Capital (”Wincove”) acquired substantially all the assets of GI Plastek Wolfeboro, LLC (”GI Plastek” or the “Company”). Based in Wolfeboro, New Hampshire, GI Plastek is a premier manufacturer of highly-engineered plastic injection molded products.

The Company is an industry leader in standard high-pressure, structural foam, gas-assist and gas counter pressure plastic injection molding methods. GI Plastek specializes in large, complex plastic parts and often deals with specialized resins that many companies are unable to mold. The Company serves a diverse range of end markets, including the military, educational, medical, industrial, construction and leisure market segments.

Wincove intends to build upon the Company’s historical track record of organic growth through expanding its customer base and penetrating new end markets. Wincove will also seek to opportunistically grow GI Plastek via acquisition.

Wells Fargo Business Credit, based in Boston, provided the senior credit facilities to support Wincove’s acquisition. Spring Capital Partners, with offices in Baltimore and Philadelphia, and MB Capital, based in Boston, invested subordinated debt in the transaction.

Wincove Capital is a New York-based lower middle-market private equity firm that was launched in 2008. Wincove partners with profitable companies to help accelerate their growth and ultimately unlock value. The acquisition of GI Plastek is Wincove’s second transaction.

For further information, please contact Wincove at (212) 370-3500. Alternatively, please visit www.wincovecapital.com and www.giplastek.com.

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CVC In Talks with Austria’s Constantia Packaging

VIENNA (Reuters) - Private equity firm CVC is in non-exclusive talks to buy a stake in Austria’s Constantia Packaging (CVER.VI) held by holding firm Constantia B.V., the holding firm said on Thursday.

Constantia B.V., in a statement, partially confirmed a report in Austrian weekly magazine Format released earlier on Thursday, but declined to be drawn on detail reported by Format. A spokeswoman for CVC also confirmed the talks.

Format said the talks were about CVC taking over a 90 percent stake in Constantia Packaging for 510 million euros ($726 million) and were part of a broader deal to settle a dispute between Constantia B.V. and a former affiliated company.

Constantia B.V. has been trying in different ways to use its stake in Constantia Packaging, worth around 470 million euros at Thursday’s share price, to settle a financial claim that real estate developer Immoeast (IMEA.VI) has against it. ($1=.7028 Euro)

(Reporting by Boris Groendahl; editing by Simon Jessop)

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Northrup To Sell TASC Unit

NEW YORK/WASHINGTON (Reuters) - Northrop Grumman Corp (NOC.N) has hired two investment banks to sell a unit that advises government military agencies in a deal that could fetch up to $2 billion, a source familiar with the matter told Reuters.

The defense contractor has hired Goldman Sachs (GS.N) and Credit Suisse (CSGN.VX) (CS.N) to shop its TASC unit, said the source, who requested anonymity because the auction is not public yet.

The source also said that a sales prospectus for the business had not yet been sent out to potential buyers, but added that private equity firms are expected to bid for the business.

Goldman Sachs and Northrop declined comment. Credit Suisse was not immediately available for comment.

Bloomberg, which was first to report this story, mentioned Carlyle Group, Kohlberg Kravis Roberts & Co and Blackstone Group (BX.N) as potential buyers. Bloomberg cited unnamed sources for its information.

Northrop’s TASC business sells systems engineering and mission analysis services to the U.S. military, the intelligence community, federal and state governments and commercial industry.

Many defense companies, including Northrop, offer services that include advising government agencies on programs that they end up bidding for, creating a conflict of interest.

That conflict prompted the U.S. Congress to pass a law in May that requires the Department of Defense to tighten rules on potential conflicts at such companies.

Investment bankers expect more U.S. defense contractors to sell such units because of the new rules.

Northrop bought TASC in 2001, as part of its $5 billion acquisition of Litton Industries Inc. TASC was founded in 1966 by engineers from the Massachusetts Institute of Technology and has nearly 5,000 employees.

Industry executives have estimated the value of the business at around $1.4 billion.

GROWING CONCERN

Loren Thompson, analyst with the Virginia-based Lexington Institute, said Northrop’s move reflected growing concern among companies providing federal services that the Obama administration would shift more and more of that work back into the government.

Thompson noted that the public sector unions were an important core constituency for the Democratic Party, and many Democrats were convinced that the Republicans have outsourced far too much work that belonged in the government.

“Everyone who’s in federal services is worried about the Obama administration’s plans to pull more work into the government,” he said.

Thompson said the move also appeared to be part of a larger corporate streamlining and reshaping being undertaken by Northrop, which recently also merged its aircraft and space sectors into a larger aerospace sector.

Jim McAleese, a Virginia-based defense consultant, said the move by Northrop indicated its belief that the TASC unit no longer had much growth potential and was now facing diminishing operation margins.

He said it clearly reflected concerns about increased “insourcing” by the Obama administrations as well as its move to hire 50,000 more acquisition experts in coming years. (Editing by Carol Bishopric) (Reporting by Jui Chakravorty Das)

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Montagu Completes Kalle Sale, Readies Survitec Sale

LONDON (Reuters) - Buyout house Montagu Private Equity is turning its attention to the disposal of Survitec after its sale of Kalle on Thursday showed returning appetite for deals in defensive sectors, sources said.

Montagu has appointed investment bank NM Rothschild to examine options for safety equipment manufacturer Survitec, a source familiar with the situation said.

Montagu, which also owns waste management firm Biffa and electronics retailer Maplin, has received approaches for Survitec from both potential private equity and trade buyers, a separate source said.

In July, Thomson Reuters LPC reported that existing and new lenders had lined up loan financing of up to 150 million pounds for the potential sale.

Montagu declined to comment.

SAUSAGE DEAL

Montagu said on Thursday it had agreed the sale of sausage casings manufacturer and sponge cloth maker Kalle to fellow buyout firm Silverfleet Capital for 212.5 million euros ($299.7 million), in one of Europe’s few multi-million euro private equity deals of the year.

“The recession proof nature of the food sector has made it possible for us to secure new debt, with the banks more willing to finance leveraged buyouts in this sector,” Guido May, partner at Silverfleet Capital said in a statement.

Silverfleet managing partner Neil MacDougall added the firm aimed to grow Kalle partly through add-on acquisitions and had already identified several acquisition targets.

The acquisition was backed by a 133 million euro financing package from a syndicate of banks led by Bank of Ireland (BKIR.I), including 113 million euros of term debt and a 20 million euro revolving credit facility, Bank of Ireland said. The sale earned Montagu two times its original investment, one of the sources said.

Montagu Capital acquired the company for an undisclosed sum from CVC Capital Partners in 2004, the same year it bought Survitec from Alchemy for 146 million pounds ($240.4 million).

Silverfleet’s acquisition is subject to approval from the competition authorities, the firm said.

(Reporting by Simon Meads, Tom Freke and Alasdair Reilly; editing by Gilbert Kreijger) ($1=.7091 Euro) ($1=.6073 Pound)

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BBVA Expected To Win Guaranty Auction

NEW YORK (Reuters) - Banco Bilbao Vizcaya Argentaria (BBVA.MC), Spain’s second-largest bank, is expected to win a government-run auction of troubled Texas lender Guaranty Financial Group Inc (GFG.N), sources familiar with the situation said on Wednesday.

The Federal Deposit Insurance Corp (FDIC), which was managing Guaranty’s sale, had set a bid deadline of Tuesday for Guaranty, whose investors include billionaire Carl Icahn, sources previously told Reuters.

Guaranty’s shares, which closed up 5 cents, or 14.7 percent, at 39 cents on the New York Stock Exchange in regular trade, fell 18 percent to 32 cents in the aftermarket.

The FDIC usually announces the outcome of an auction shortly after the bid deadline. In such situations, regulators seize the troubled bank, typically on a Friday, and hand over its assets to the winning bidder.

A deal would help BBVA further build on its U.S. operations after a 2007 purchase of Birmingham, Alabama-based Compass Bank. BBVA bought Compass for $9.6 billion, more than tripling its U.S. branch base, especially in areas with large Spanish-speaking populations. Compass now operates 583 branches in Texas, Alabama, Arizona, Florida, Colorado and New Mexico, according to its website.

Austin-based Guaranty, which had about $14.4 billion in assets as of March 31, is considered attractive for its more than 150 branches in Texas and California. Guaranty Financial is the holding company for Guaranty Bank.

Other bidders for Guaranty included a consortium led by financial services executive Gerald Ford that includes several private equity firms, sources previously told Reuters. Media reports also cited US Bancorp (USB.N) as a bidder.

The Ford-led group included Blackstone Group (BX.N), Carlyle Group, Oak Hill Capital and TPG Capital, according to the sources.

The bid by the private equity consortium came despite the uncertainty around propsed FDIC guidelines for investments by such groups in failing institutions.

The FDIC provoked a backlash when it proposed tough guidelines in July, but is expected to soften the policy when it meets Aug. 26.

BBVA could not immediately be reached for comment. An FDIC spokesman said the agency does not comment on open and operating institutions. The sources declined to be named because the auction has not been made public.

So far this year 77 banks have failed.

By Megan Davies and Paritosh Bansal
(Additional reporting by Karey Wutkowski, editing by Leslie Gevirtz)

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What’s Holding Back The Tidal Wave of PE-Backed Bankruptcies?

At the beginning of this year, bankruptcy pros looked at the massive hangover of LBO debt, coupled with the deteriorating economy, and predicted a giant wave of bankruptcies would wash over the private equity world in 2009. While bankruptcies are up over last year (on pace to double, in fact), the figure is still not close to “tsunami” proportions. Part of that can be attributed to increasing flexibility on the part of the lenders.

One driver of that flexibility is a move called “amend and extend,” a debt workaround that Buyouts’ Ari Nathanson outlined in the magazine’s latest issue (sub. required). In such transactions, the buyout firm negotiates with a firm’s existing lenders to extend the maturity on a portfolio company’s loan in exchange for increased pricing on the leverage.

These so-called “amend-and-extend” deals are growing in popularity among borrowers looking to stave off loan maturities in a market lacking traditional refinancing and exit opportunities. Through July, S&P tracked a total of 56 issuers that have sought amend-and-extend deals this year, 24 of which were sponsor-backed companies.

Of the 26 buyout-backed companies that have undergone such transactions thus far in 2009, four were backed by KKR. Yesterday, KKR’s Henry Kravis said that the firm has prioritized 11 portfolio companies that will require debt restructuring or refinancing. The firm has put two amendments in place for health care portfolio company HCA in 2009, he said.

Companies owned by Blackstone Group, Bain Capital, TPG, Carlyle, THL Partners, Silver Lake, and Hellman & Friendman all made appearances on the S&P list.

Blackstone Group commented on the amend and extend trend in the firm’s recent earnings call. CEO Steve Schwarzman said the firm has retired or extended more than $10 billion worth of debt this year. James said that, in general, banks have been happy to “kick the can down the road,” because it is cutting back on the number of distressed situations that turn to bankruptcy.

Regarding the terms, Nathanson wrote that spread increases for these deals averaged 160 basis points in July. Meanwhile fee increases averaged an increase of 38 points, according to S&P. Bu these deals aren’t for the very distressed:

Because of the additional price burden on the part of the issuer, and the prolonged exposure to a legacy asset on the part of the lender, amend-and-extend deals are not right for every company looking to stave off a near-term maturity. William Shields, a partner at law firm Ropes & Gray, said companies out of compliance with their covenants or those that lack some semblance of stability need not apply.

The lowest rating on a sponsor-backed company completing such a transaction in 2009 was ‘B-’, according to S&P.

Read more:

Lynn Tilton Wants To Save The Middle Market (But Can’t Do It Alone)

The Government Has Excluded the Middle Market

Sankaty Raising Funds for DIP and Mid-Market Lending

Who’s Filling The Senior Loan Void? It’s Your Friendly Regional Bank
THL Raising $300 Million For Blind Pool Credit IPO
ACAS Alums Form New Mezz Fund: Boathouse Capital
CastleGuard Partners Wants To Revive Middle Market Lending
Freeport Financial Empties Ship
Heads Keep Rolling at Mid-Market Lenders
Filling the Senior Loan Void: Chatham Capital Steps Up

(Why are we writing about debt so much, you ask? Because thanks to its scarcity, there are no deals to cover!)

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PE-Backed SMART Merging with LECG

SMART Business Advisory & Consulting LLC, a business advisory owned by Great Hill Partners, has agreed to merger with LECG Corp. (Nasdaq: XPERT). The deal includes the issuance of approximately $39.9 million worth of LECG shares, plus a $25 million investment commitment from Great Hill.

PRESS RELEASE

LECG Corporation (NASDAQ: XPRT), a global expert services firm, today announced it has entered into definitive agreements to merge with SMART Business Advisory & Consulting, LLC (SMART), a privately held provider of business advisory services, and to receive a $25 million cash investment from SMART’s majority shareholder, Great Hill Partners. Under the agreements, LECG will issue approximately 10.9 million shares of common stock having a value of $39.9 million to acquire all of SMART’s outstanding shares, and LECG will issue approximately 6.3 million shares of a newly created Series A Convertible Redeemable Preferred Stock at a purchase price of $3.96 per share in exchange for a $25 million cash investment in the combined company. The company anticipates these transactions will be accretive in 2010.

In combination with LECG’s premier expert services in Economics, Finance and Accounting, SMART brings top consultants and a significant penetration of Fortune 200 clients as well as approximately $100 million in revenues from highly complementary financial advisory and business consulting practices, including technology, business process improvement, compensation and benefits, accounting, actuarial and tax. The firm has a strong focus on the banking, insurance, real estate, healthcare, education and public sectors. In its verticals, SMART provides services to over 50% of industry leaders. With virtually no overlap in services, LECG believes this transaction will provide optimal synergies. SMART’s revenues have a roughly 25% recurring component that will provide a good foundation from which to grow LECG’s annuity business and balance out LECG’s mainly event-driven revenues. SMART expects to generate adjusted EBITDA of approximately $10 million in 2009. The combined company expects to realize business and margin improvements in 2010, including approximately $6 million in annualized operating savings.

Steve Samek, 56, Chief Executive Officer of SMART since 2008, will become CEO of the combined company and a member of the Board of Directors upon completion of the merger, replacing Michael Jeffery, who announced in July that he would be stepping down as LECG’s CEO. Mr. Samek is a 35-year veteran of the consulting, business advisory and accounting industry and was a Managing Partner at Arthur Andersen responsible for the $3 billion in U.S. operations. During his tenure, the firm garnered significant market penetration, streamlined operations, and improved financial performance and service levels by instituting world-class processes.

“We believe this merger is a transformational event for LECG and potentially the professional services industry. The combination of our firms will create a leading expert and business advisory services platform, increase our scale and scope, broaden our services and expertise, and provide additional capital and strong executive leadership going forward,” said Michael Jeffery, CEO of LECG. “I will be very pleased to pass the baton to Steve Samek, a highly accomplished innovator and leader in the global professional services market. I strongly believe he is the right person to take the company to the next level. With an impressive track record of expanding services, market penetration and profitability, he has created and led multi-practice and multi-discipline collaborative teams of top talent, aligning and delivering success to all stakeholders. The combination of our companies significantly strengthens our competitive position and should allow LECG to capture greater share as demand returns to our industry.”

“I’m excited to be joining a truly global firm with such a strong group of highly credentialed experts at what I see as a transformational time in the global economy,” said Steve Samek, CEO of SMART. “The combined firm will deliver an exceptionally broad range of expert and professional service offerings to help guide our clients through a rapidly changing regulatory, economic and political environment. I’m thrilled at the opportunity to work together to quickly execute a plan to realize the promise of our combined companies.”

“The Board believes this merger is advantageous to all stakeholders, dramatically improving the competitive position of the company,” said Garrett Bouton, Chairman of LECG’s Board of Directors. “Great Hill Partners’ $25 million investment in the combined company will represent the first major capital investment in this sector in more than a year and we are confident that their interests will be aligned with those of our existing shareholders. We look forward to having representatives from such a successful investment firm on our board and believe that our strengthened balance sheet and enhanced operating platform will provide a further competitive advantage as the markets recover.”

“There are fundamental shifts underway in the global professional services marketplace today. We believe disciplined leadership and a more diversified and integrated platform will be the keys to future success for the combined company,” said Chris Gaffney, Managing Partner of Great Hill Partners. “We believe the combined entity will be well-positioned for future growth and expanded profitability as regulatory changes and an improving economy come together to provide greater opportunities in the sector,” he added.

The Board of Directors for each company has approved the transactions. In the proposed merger transaction, LECG will acquire 100% of SMART’s outstanding stock, in exchange for which LECG will issue approximately 10.9 million shares of common stock having a value of approximately $39.9 million based on the August 14, 2009 closing stock price of $3.65, and will assume approximately $32.4 million of SMART net debt as of June 30, 2009. In the investment transaction, SMART’s majority shareholder, Great Hill Partners, will make a $25 million cash investment into LECG in exchange for approximately 6.3 million shares of Series A Convertible Redeemable Preferred Stock. This stock will be convertible into LECG’s common stock at a price of $3.96 per share, representing a 10.6% premium to LECG’s 20-day average closing stock price as of August 14, 2009, and will provide a 7.5% dividend payable in cash or stock at the new company’s choice. Upon completion of the transactions, Great Hill Partners will own voting stock representing approximately 40% of the outstanding voting power of the new company. At the closing, LECG has agreed that its Board of Directors will consist of four individuals nominated by the current LECG Board of Directors, Mr. Samek, and two representatives of Great Hill Partners. The merger and the investment transactions are subject to both being consummated concurrently with each other. The transactions are further subject to a number of other customary closing conditions, including regulatory approval and the approval of LECG’s shareholders. LECG and SMART will operate their businesses independently until the closing of the transactions. LECG expects the closing of the transactions to occur in the fourth quarter of calendar year 2009. The combined entity will operate under the LECG name and continue as a publicly traded company.

Conference Call Webcast Information

LECG will host a conference call and live webcast to discuss the proposed transaction at 8:30 a.m. Eastern time tomorrow, Tuesday, August 18, 2009. Domestic callers may access this conference call by dialing 877-419-6598. International callers may access the call by dialing 719-325-4875. For a replay of this teleconference, please call 888-203-1112 or 719-457-0820, and enter the pass code 1489449. The replay will be available through August 25, 2009. The webcast will be accessible through the investor relations section of the company’s website, www.lecg.com. A replay of the call will be available on the company’s website two hours after completion of the live webcast.

Additional information and where to find it

LECG intends to file with the Securities and Exchange Commission a proxy statement and other relevant materials in connection with the transactions. When finalized, the proxy statement will be mailed to the stockholders of LECG. Before making any voting or investment decision with respect to the transactions, investors and stockholders of LECG are urged to carefully read the proxy statement and the other relevant materials when they become available because they will contain important information about the proposed transactions. The proxy statement and other relevant materials (when they become available), and any other documents filed by LECG with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, investors and stockholders of LECG may obtain free copies of the proxy statement (when available) and other documents filed by LECG with the SEC from LECG’s website at www.lecg.com.

Participants in the solicitation

LECG and its directors and executive officers may be deemed to be participants in the solicitation of proxies from LECG’s stockholders in connection with the transactions. Information about LECG’s directors and executive officers is set forth in the proxy statement on Schedule 14A for LECG’s 2008 Annual Meeting of Stockholders filed with the SEC on April 25, 2008 and in the amended Annual Report on Form 10-K filed by LECG with the SEC on April 29, 2009. Additional information regarding the interests of participants in the solicitation of proxies in connection with the transactions will be included in the proxy statement that LECG intends to file with the SEC. Stockholders may obtain additional information regarding the direct and indirect interests of LECG and its directors and executive officers with respect to the transactions by reading the proxy statement once it is available and the other filings referred to above.

Forward-Looking Statements

Statements in this press release and the related conference call concerning the proposed transaction and future business, operating and financial condition of the company, including expectations regarding revenues and net income for future periods, statements concerning the plans and objectives of LECG’s management for future operations, statements of the assumptions underlying or relating to any forward looking statement, statements regarding the timing or completion of the transactions, and statements using the terms “believes,” “expects,” “will,” “could,” “plans,” “anticipates,” “estimates,” “predicts,” “intends,” “potential,” “continue,” “should,” “may,” or the negative of these terms or similar expressions are “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expectations. Risks that may affect actual performance include the ongoing economic downturn and adverse economic conditions, dependence on key personnel, the cost and contribution of acquisitions, risks inherent in international operations, management of professional staff, dependence on growth of the company’s service offerings, the company’s ability to integrate new experts successfully, intense competition, and potential professional liability, the company’s ability to integrate the operations of SMART, the failure to achieve the costs savings and other synergies LECG expects to result for the transactions, the outcome of any legal proceedings instituted against the company, SMART and others in connection with the transactions, the failure of the transactions to close for any reason, the amount of the costs, fees, expenses and charges relating to the transactions, business uncertainty and contractual restrictions prior to the closing of the transactions, the effect of war, terrorism or catastrophic events, stock price, foreign currency exchange and interest rate volatility. Further information on these and other potential risk factors that could affect the company’s financial results is included in the company’s filings with the Securities and Exchange Commission. The company undertakes no obligation to update any of its forward-looking statements after the date of this press release.

About LECG

LECG, a global expert services and consulting firm, with approximately 750 experts and professionals in 30 offices around the world, provides independent expert testimony, financial advisory services, original authoritative studies, and strategic advisory services to clients including Fortune Global 500 corporations, major law firms, and local, state, and federal governments and agencies worldwide. LECG’s highly credentialed experts and professional staff conduct economic and financial analyses to provide objective opinions and advice regarding complex disputes and inform legislative, judicial, regulatory, and business decision makers. LECG’s experts are renowned academics, former senior government officials, experienced industry leaders, and seasoned consultants.

About SMART

SMART Business Advisory and Consulting (www.SMARTgrp.com) is a premier, full-service independent provider of financial advisory and business consulting services, serving clients throughout the US and globally. SMART offers innovative solutions to public and private companies in the areas of financial advisory and business consulting, technology, business process improvement, accounting, compensation and benefits, actuarial, and tax. *Through an alternative practice structure, SMART and Associates, LLP offers a full range of attest services.

ABOUT GREAT HILL PARTNERS

Great Hill Partners, LLC is a private equity firm that manages over $2.5 billion in capital and focuses on investing in growth companies operating in the business and consumer services, media, transaction processing and software industries. Great Hill Equity Partners III, L.P. and its affiliates target equity investments of $50 million to $150 million. For more information, please visit the Great Hill Partners Web site at www.greathillpartners.com.

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KKR, Itochu May Bid on Bellsystem24

HONG KONG/TOKYO (Reuters) - Japanese trading firm Itochu (8001.T) is in talks with KKR [KKR.UL] to form a joint bid for Citigroup Inc’s (C.N) Bellsystem24, in what might be the largest private equity deal in Japan this year, sources said.

U.S. buyout giant Kohlberg Kravis Roberts & Co and European firm Permira have emerged as the most aggressive contenders for the purchase of Bellsystem24, which is expected to be worth about $1.5 billion, Reuters reported last week. [ID:nT69396]

The transaction is part of Citigroup’s global effort to unload assets to bolster its capital base and the highest-profile deal handled so far by private equity arm Nikko Principal Investments Japan.

KKR, which opened its Tokyo office in 2006 but has not yet made a major deal in Japan, was not immediately available for comment. Itochu, which already has some business ties with Bellsystem24, a leading telemarketer, declined to comment.

KKR has hired Morgan Stanley (MS.N) as its financial advisor for the bid and Permira has appointed JPMorgan (JPM.N), said the sources with direct knowledge of the matter.

Other banks are pitching KKR for additional financial advisory roles as some of them believe the tie-up between KKR and Itochu, which has experience in running a similar business to Bellsystem24, may have a greater chance of winning, said the sources.

Bellsystem, which operates call centres, competes against Moshi Moshi Hotline Inc (4708.T) and Transcosmos Inc (9715.T).

The sources declined to be identified as the bidding process is confidential.

The deal is also drawing attentions from other private equity funds and potential strategic buyers, which have been doing due diligence in recent weeks, and the seller has set Sept. 1 as the deadline to receive the first round of bids, said the sources.

Citigroup tried to sell Bellsystem24 last year, but its initial attempts stalled over price concerns.

By Stephen Aldred and Emi Emoto

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Price, Union Threaten AIG’s Taiwan Unit Sale

TAIPEI/HONG KONG (Reuters) - A rich asking price could once again sink AIG’s (AIG.N) plan to sell its Taiwan insurance unit after an attempt at a sale earlier this year met a similar fate.

American International Group, once the world’s biggest insurer before the U.S. government had to bail it out last year, is seeking about $2 billion for Nan Shan Life, likely its most expensive asset for sale in Asia.

But some potential buyers say the Taiwan unit’s net assets could be worth as much as 40 percent below the T$100 billion ($3 billion) that AIG claims, sources told Reuters.

As the August 28 sale deadline nears, bidders are re-evaluating the situation and some could walk away due to disagreements over the price and lack of information provided by the seller, said financial industry sources in Taiwan and Hong Kong.

“Lots of people looked at Nan Shan and many of them walked away,” said one of the sources. “Some decided to bid while now even those bidders want to have a second thought - there must be a reason behind that.”

In June, the Nan Shan sale initially attracted more than a dozen potential buyers including leading U.S. firm JC Flowers but less than half of them decided to go forward with a formal bid.

“The visibility is low,” said another source, referring to the financial information AIG had offered at the request of some private equity firms over the last few days.

Last month, two U.S. buyout funds — the Carlyle Group and Bain Capital — were selected by AIG and Taiwan regulators to enter the second round of bids.

Carlyle is partnering Fubon Financial (2881.TW), parent of Taiwan’s No.2 insurer, while Bain has teamed up with Chinatrust Financial (2891.TW), Taiwan’s top credit card issuer, for the bid.

“There is a 50 percent chance the bid will fail, or AIG will have to lower its asking price,” said an analyst at a European securities house in Taiwan, who sought anonymity as he was not authorized to speak to media.

Primus Financial, a new firm led by former top Citi (C.N) banker for Asia, Robert Morse, also made it to the second-round and has teamed up with Hong Kong investor China Strategic (0235.HK) to fund its bid.

Cathay Financial (2882.TW), the parent of Taiwan’s biggest insurer, is also in the race and the only one bidding by itself.

The second-round is believed to be the final one, and a winner will be selected next week, said the sources who declined to be identified because the bidding process is confidential.

Nan Shan, which turned a profit in the first half of this fiscal year after a loss of T$46.7 billion ($1.4 billion) last year, declined to comment on the bidding process.

REGULATORY HURDLE, UNION TROUBLE

AIG isn’t the only one looking for a high price for Nan Shan.

Taiwan’s financial regulator is also aiming to keep Nan Shan’s price high, concerned about a negative backlash if people think the asset is being sold at a fire-sale price, said another source.

Media and scholars in nearby mainland China have criticized Beijing for selling stakes in state lenders like China Construction Bank (601939.SS) (0939.HK) too cheaply to foreigners who later reaped big profits after selling their stakes.

“The Taiwan regulator doesn’t want to copy the history that its counterpart in mainland China did,” said the source.

“In this case, it’s not just about AIG. If you sell Nan Shan too cheaply today, tomorrow people will say the whole Taiwan financial system is cheap, having Nan Shan as a benchmark deal,” he added.

For their part, potential buyers also have an interest in talking down the value of the company ahead of any sale.

Potential buyers could also be scared off by other issues.

Nan Shan’s union, in front-page newspaper advertisements last week, strongly demanded that AIG settle the pension obligations they’ve accumulated over the past decades.

A victory for the union in the pension battle would make that liability either too difficult or too high to estimate, forcing some bidders to reconsider the fair value of the company.

Nan Shan’s union includes up to 40,000 sales agents, the second-biggest in the island’s insurance market.

“This is a major uncertainty and tough issue. We have to figure it out clearly,” said a source with one of the domestic insurers, which is jointly bidding for Nan Shan with a foreign fund.

($1=T$33.0)

(Reporting by Faith Hung and George Chen; Editing by Doug Young and Mathew Veedon)

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Guaranty Financial Draws Bid – Sources

NEW YORK (Reuters) - A consortium that is led by financial services executive Gerald Ford and includes a number of private equity firms, submitted a bid for troubled bank Guaranty Financial (GFG.N) despite uncertainty over U.S. regulation guidelines, sources familiar with the matter said on Tuesday.

It was unclear how many offers were submitted in total by Tuesday’s deadline for bids, but sources said that there were also expected to be bids from other parties.

U.S. regulator, the Federal Deposition Insurance Corporation, recently proposed tough guidelines for private capital investors in failed banks and the industry is awaiting final guidelines.

It was unclear how the Ford-led bid had been structured; but industry insiders and executives have previously said that the guidelines as they were originally proposed would quell private capital investment into banks.

The Ford consoritum includes Blackstone Group (BX.N), Carlyle Group, Oak Hill Capital and TPG, the sources said.

By Megan Davies and Paritosh Bansal

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Pliant’s Apollo-Shaped Bankruptcy Plan Goes To Vote

WILMINGTON, Del. (Reuters) - Apollo Management won a six-month bankruptcy court battle to improve the terms of Pliant Corp’s reorganization plan, which will now be put to a creditors’ vote, according to court documents.

The maker of plastic packaging filed for bankruptcy in February with a negotiated plan that proposed transferring ownership to senior lenders.

Apollo, a significant holder of junior debt, as well as other creditors, opposed Pliant’s plan, which would have paid them warrants that they said were worth pennies on the dollar.

The new plan, which combines an amended proposal from Pliant and an alternative plan from Apollo, would improve the payout for junior creditors to 17.5 cents on the dollar.

A judge on Monday approved Pliant’s disclosure statement that is to be sent to creditors for a vote to approve its plan of reorganization.

The case is In re Pliant Corp et al, U.S. Bankruptcy Court, District of Delaware, No. 09-10443.

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MGM Replaces CEO, Hires Turnaround Expert

NEW YORK/LOS ANGELES (Reuters) - Metro-Goldwyn-Mayer Inc has replaced its chief executive with a team that includes turnaround expert Stephen Cooper and its production boss, Mary Parent, as the storied Hollywood studio grapples with reducing a high debt load.

Harry Sloan, a veteran Hollywood businessman who took the helm a few months after the 2005 buyout of MGM and who also invested in MGM, will step down from the CEO position but continue as chairman.

Cooper and Parent, along with Bedi Singh, MGM’s chief financial officer, have been named “members of the office of the CEO.” Cooper, who was also named vice chairman, will be tasked with leading MGM’s efforts to evaluate alternatives to improve its balance sheet, the company said.

Cooper co-founded restructuring advisory firm Zolfo Cooper LLC, oversaw Enron Corp’s bankruptcy as interim chief executive and oversaw Krispy Kreme Doughnuts Inc.’s restructuring as CEO.

Parent, a former executive with Universal Pictures, joined MGM in March 2008 to breathe new life into the studio and has been leading MGM’s production efforts as chairwoman of MGM’s Worldwide Motion Picture Group.

Movie studios have been fighting tumbling DVD sales and a tougher environment to raise money for new film production.

Cash flow from MGM’s film and TV library operations finished 2008 down about 5 percent from a year ago, a source familiar with the matter previously told Reuters.

The studio is home to classics such as the James Bond movies and has an upcoming release schedule that includes a remake of 1980 movie musical “Fame” in September.

MGM has been trying to refinance $3.7 billion of debt, most of which stems from a 2005 buyout of the company by a group of private equity and media investors.

The Hollywood studio said in May this year said it hired investment bank Moelis & Co to help refinance its debt and that it was talking with a steering committee of 140 creditors as part of the process.

MGM faces a payment of $250 million in April 2010 on its revolving credit, with the $3.7 billion of term debt due in June 2012.

MGM was bought by private equity firms Providence Equity Partners, TPG (TPL.N), DLJ Merchant Banking Partners, a unit of Credit Suisse (CSGN.VX) and Quadrangle Group; and media firms Sony (6758.T) and Comcast (CMCSA.O) in 2005 for $2.85 billion.

By Megan Davies and Sue Zeidler
(Editing by Steve Orlofsky)

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Financing In Place for InBev’s CEE SAle

LONDON (Reuters) - The financing package backing CVC’s bid for Anheuser-Busch InBev’s (ABI.BR) central and eastern European (CEE) assets is complete but hangs in the balance as ABInBev weighs its options, banking sources said on Tuesday.

Ten to 12 banks provided an all-senior financing with no junior debt to back CVC Capital Partners’ bid at the end of July, a leveraged banker said.

CVC’s bid failed to meet ABInBev’s price expectations, several bankers said, and the company is considering options which include splitting up the central and eastern European assets. “The financing package is all wrapped and has been for some time. We are expecting a decision imminently, either this week or early next week,” the leveraged banker said.

CVC could not immediately be reached for comment.

Offers were expected to come in at around 1.4 billion euros ($2 billion), while ABInBev was seeking around 2 billion euros, according to one person familiar with the situation, Reuters reported last month.

Bankers said the financing package which consisted of around 700 million euros of debt and 700 million euros of equity could be boosted by a vendor loan from ABInBev to ease the sale.

Vendor loans from sellers to buyers defer some of the payment and are typically used in times of market dislocation to resolve disputes over business valuations.

Banks providing the loan include specialist regional lenders including ING, HSBC, JP Morgan, Bank of Ireland, Calyon and UniCredit, banking sources said.

The loan is expected to have low leverage of around three times to compensate for the complex nature of the asset, which consists of 11 breweries in seven countries and requires lenders to take currency risk.

“Most banks doing business in the region are used to taking currency risk. You can’t really hedge your way out, which is why leverage is three times and not six times as it would be for such a cash-generative business,” the leveraged banker said.

The loan’s pricing is around 500 to 600 basis points, a banker said, and is expected to be held by the club of banks with no further sell-down if CVC’s bid is successful, several sources said.

(Reporting by Tessa Walsh; Editing by David Holmes)

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Energy Firms Form Frontier Gas Services

Tenaska Capital Management and Energy Spectrum Partners have formed Frontier Gas Services LLC, a joint venture that will acquire and operate midstream natural gas infrastructure assets. The firms are committing upwards of $250 million, combined.

PRESS RELEASE
Tenaska Capital Management, LLC (TCM), an affiliate of Tenaska Energy, Inc. and the manager of the $2.4 billion TPF II, L.P. private equity fund, today announced that it has expanded and diversified its investment in the U.S. midstream natural gas sector by establishing a joint venture that will operate as Frontier Gas Services, LLC (Gas Services). The joint venture has been formed by TCM and Energy Spectrum Partners V LP (Energy Spectrum), a midstream-focused private equity fund, to back Frontier Energy Services, LLC (Frontier), an experienced and successful midstream manager and operator. Gas Services will focus on the acquisition, development, ownership and operation of midstream natural gas infrastructure assets primarily in the Mid-Continent, Permian Basin, East Texas, and unconventional shale plays throughout the U.S.

TPF II and Energy Spectrum will own a majority interest in the joint venture and pledge significant equity capital to fund natural gas midstream development and acquisition activities. TPF II and Energy Spectrum plan to invest at least a quarter of a billion dollars in Gas Services. Frontier will own an interest in and be the joint venture’s day-to-day manager, responsible for originating and completing investment opportunities. As part of the initial capitalization of Gas Services, Energy Spectrum and Frontier will contribute from their existing Frontier Midstream partnership the 36 MMcf/d Indian Creek natural gas processing facility located in Roberts County, Texas with production from the Granite Wash formation.

“The joint venture underscores our commitment to the midstream natural gas sector as an attractive, long-term investment opportunity,” said TCM Senior Managing Director Daniel E. Lonergan. “By combining the many strengths of TPF II, Energy Spectrum and Frontier, we have created a firm that has the resources and management talent to identify and build sustainable value in the domestic midstream natural gas sector. In addition to our Voyager Midstream portfolio company and our direct investments in the space, the joint venture provides us with a diversified platform from which we can deploy our capital to what we think is a very promising growth sector.”

Frontier specializes in the acquisition and commercial development of midstream natural gas assets. It is led by its founder, President and Chief Executive Officer Dave Presley, who has more than 32 years of experience in all phases of the natural gas industry.

Presley and his leadership team have been directly responsible for the operation of approximately 1.3 Bcf/d of gathering and processing capacity, 260 MMcf/d of natural gas treating capability and approximately 4,000 miles of natural gas gathering and transmission pipeline facilities. Frontier’s management team has successfully invested over $500 million of capital in the midstream natural gas industry. Recently, Frontier has expanded its focus to include greenfield gathering and treating infrastructure in the unconventional natural gas resource plays currently under development in the U.S.

“The joint venture provides us with a strong and more expansive platform to continue to grow our existing asset base,” said Presley. “I have long admired Tenaska and the TCM team, and our team and long-time partner Energy Spectrum are pleased that we will have the opportunity to work with them to build a midstream-focused natural gas business through acquisitions and greenfield development projects.”

“As long-standing investors with Dave and his team, we are excited to continue our partnership with them as they enter a new phase in their evolution,” said Energy Spectrum President Tom Whitener. “The joint venture brings together some of the most talented and experienced investors and operators in the U.S. midstream natural gas marketplace, and we look forward to helping it succeed.”

About Tenaska Capital Management, LLC

Tenaska Capital Management, LLC (TCM) is an affiliate of Tenaska Energy and provides management services to TPF II, as well as to its predecessor fund, Tenaska Power Fund, L.P.

About Tenaska Energy, Inc.

Tenaska Energy, Inc. is one of the largest independent power producers in the U.S. Forbes magazines ranks Tenaska 24th on its list of the largest privately held U.S. companies, based on 2007 revenues. Tenaska affiliates also market natural gas, electric power and biofuels, with Tenaska’s natural gas marketing affiliate ranked as one of the top 10 natural gas marketers in North America. Tenaska affiliates are also involved in private equity fund management, fuel supply, natural gas exploration and production and electric transmission development. For more information about Tenaska, visit the company’s Web site at www.tenaska.com.

About Energy Spectrum Capital

Energy Spectrum Capital was founded in 1996 to manage private equity funds that make direct investments in well-managed companies that acquire, develop and operate energy assets. The founding partners of the firm have spent almost all of their careers in the energy industry. In December 2007, Energy Spectrum closed its fifth fund, Energy Spectrum Partners V LP, with total limited partner commitments of $600 million. The closing of Energy Spectrum Partners V LP brought Energy Spectrum’s total direct equity under management to $1.3 billion. More information about the firm can be found on its Web site at www.energyspectrum.com.

About Frontier Energy Services, LLC

Frontier Energy Services, LLC, headquartered in Tulsa, Oklahoma, is a full-service, midstream energy company that specializes in the acquisition and commercial development of natural gas midstream assets, including gathering, compression, processing, and treating facilities, and the marketing of natural gas and natural gas liquids. Frontier was founded by Dave Presley in 2002. Its management team represents more than 150 years of combined experience in all phases of the natural gas industry. For more information about Frontier, visit the company’s Web site at www.frontierenergyllc.com.

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