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July 29, 2010 |
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| September 16, 2009 |
By: Review staff |
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Bruce I. March and Donn A. Beloff
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ealmakers: Donn A. Beloff and Bruce I. March
The Deal: Beloff and March led a team of dozens of Greenberg Traurig attorneys with that helped Liberty Acquisition Holdings complete its $6.7 billion acquisition of London-based Pearl Group, the largest manager of pension funds and life insurance funds in the United Kingdom, and a related business.
Liberty, a Cayman Islands company, paid about $880 million in cash and $1.3 billion of securities and assumed more than $4 billion of Pearl’s debt. Liberty acquired both Pearl and a related business called Opal Reassurance, a reinsurer of some annuity liabilities of Pearl. Pearl is a money manager with about $116 billion in assets under management.
Details: The multi-layered deal took about six months to negotiate and complete, starting in February, and Liberty had little time to waste. Liberty went public in February 2008 as a special-purpose acquisition corporation, or SPAC, so it had to acquire an operating company by February 2010 or return shareholders’ money. Also known as a “blank check” company, SPACs must acquire an operating company within a set period of time or liquidate by returning shareholders’ money. Many SPACs have been forced to liquidate because they failed to complete shareholder-approved acquisitions soon enough. “A lot of SPAC deals aren’t getting done these days, no matter how they’re structured,” March said.
Two private equity funds formed Pearl Group in 2005 to acquire insurance companies and pension companies in the U.K. and manage their assets. But its previous owners had to sell Pearl because it defaulted on a multi-bank credit agreement
“They leveraged Pearl when they purchased it. Whenever a private equity fund buys a company, it’s going to put leverage on,” Beloff said. But Pearl also lacked capital sufficient to comply with British government regulations, among other problems.
“There were 8 million policyholders of Pearl who, if Pearl would have gone under, would have lost their pensions and would have lost their life benefit,” Beloff said. The British government and Pearl’s banks had considered seizing control of the company before Liberty “went to the banks and the government as the white knight.”
Nothing about the white-knight takeover was simple, though. For starters, Liberty bought two companies, not just one.
A debt restructuring was part of the deal, too. Sixteen international banks that loaned money to Pearl agreed to forgive debts totaling 557 million pounds in exchange for Class B shares of Liberty. The deal also involved payment of a settlement to a third-party pension administrator appointed by the UK government, which contended that Pearl had mismanaged pension funds. In addition, the deal required approval from Liberty’s shareholders to be consummated. “Liberty was really a whole series of separate transactions,” Beloff said, and “every one of these transactions was dependent on every other transaction occurring simultaneously.”
Liberty shareholders approved terms of the deal in July. The parties completed the acquisition of Pearl and all related transactions on Sept. 2. Liberty changed its name to Pearl, changed its ticker symbol on the Euronext exchange to PEARL, and plans to add considerably to its assets under management. “Effectively, it’s no harder to manage $116 billion than it is to manage $200 billion or $300 billion,” Beloff said.
Background: Greenberg shareholders Beloff and March, based in Fort Lauderdale, led the law firm’s work on behalf of Liberty together with two of their colleagues in New York, SPAC expert Alan Annex and Kenneth Gerasimovich, who specializes in mergers and acquisitions.
Beloff and March previously represented one of the founders of Liberty Holdings, Nicolas Berggruen. Beloff and March focus their practices on mergers and acquisitions, public and private securities offerings, private equity and venture capital transactions, and strategic business advice.
— Mike Seemuth
Financing hurt by run-down complex
Dealmakers: Daniel Cunningham and Derek Gibbs
The Deal: The Marcus & Millichap brokers represented Continental Gardens of Miami, which sold the Haverhill Garden Apartments in West Palm Beach for $4.27 million.
Cunningham and Gibbs also brought in the buyers, who are Pellegrino and Michele Barone of Wellington, according to Palm Beach County records.
Details: Continental took a major hit on the sale of the 94-unit apartment complex at 1909 Haverhill Road. The Miami investment company paid $16.5 million for the complex in March 2003.
Despite knowing that the current state of the real estate market would result in a steep discount from the 2003 purchase price, Continental chose to put the complex up for sale to re-invest the proceeds into distressed properties throughout South Florida, Cunningham said. The 7.63-acre property generated nine offers.
Continental provided $2.15 million in seller-financing at a 6 percent interest rate for three years.
The price came to $45,372 per unit.
The deteriorated condition of the complex, which was built in 1981 and is about 90 percent occupied, made obtaining financing from banks for the acquisition nearly impossible, Cunningham said.
“This is a C-minus property in a C-plus location,” he said. “The property needed way too much lipstick to be able to finance.”
The brokers helped the Barones refinance another property they own so they could make a down payment of about $2 million. Once the Barones got cash out of the other property, closing the Haverhill deal took only five days, Cunningham said.
The buyer has begun upgrading the property, including improving the landscaping and parking lots.
“The buyer has teams in place that are ready to do the work,” he said. “It is going to be a long process, but by this time next year they should have it looking nice.”
Background: Cunningham and Gibbs are associates in Marcus & Millichap’s Fort Lauderdale office.
Realtor helps seal St. Petersburg deal
Dealmaker: Richard Tarquinio
The Deal: Makabe & Makabe of California paid $10.5 million in May for the Tyrone Corners shopping center in St. Petersburg.
The seller was SM-LTCB St. Petersburg of Ohio, a company affiliated with Developers Diversified Realty, an Ohio retail real estate investment trust.
The seller was represented by CB Richard Ellis’ Tarquinio, along with CBRE’s Mark Shellabarger in Tampa.
Details: The 80,703-square-foot center at 2500 66th St. North is anchored by JoAnn Fabrics, HomeGoods, Panera Bread, AT&T Wireless and Chick-Fil-A. It is across from the 1.05 million-square-foot Tyrone Square Mall, whose tenants include Macy’s, Sears and Dillard’s.
Tyrone Corners was on the market about two months. The buyer is a private investment group that acquired the center for a long-term hold, Shellabarger said.
In an unusual move, the buyer agreed to pay two years’ of a lease held by tenant Boaters World, which was liquidating its business after parent company Ritz Camera went bankrupt, Shellabarger said.
Background: Tarquinio is senior vice president in CB Richard Ellis’ investment properties group in Boca Raton.
Christina Monacelli, an associate in the Boca Raton office also worked on the deal.
Shellabarger is a senior vice president with the brokerage’s private client group in Tampa.
The buyer was not represented by a broker.
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