Mezzanine Finance

Orrick has significant experience representing lenders, investors and issuers in structuring and closing highly negotiated and complex mezzanine transactions, as well as representing sponsors and investors in the formation of mezzanine funds. Orrick’s finance, corporate and real estate lawyers work closely with lawyers in the firm’s tax, employment and litigation groups to respond to the needs of our diverse clients in the mezzanine finance area. The result is a multi-disciplinary practice that capitalizes on the talents of a team of Orrick lawyers with expertise in secured transactions, corporate reorganizations, private and public placements of debt and equity securities, business formation, tax, real estate, bankruptcy and restructurings, employment law, intellectual property, ERISA, mergers and acquisitions, and securities law, among other areas.

Orrick’s integrated team approach to client representation provides our clients with mezzanine specialists who are in a position to rapidly respond to the strategic or transactional issues that our clients face. Our clients range from emerging businesses to Fortune 100 companies, including domestic and foreign banks, investment houses and other institutional lenders, investment funds, issuers and underwriters of public and private offerings of debt, equity, convertible and hybrid securities, and city, state and foreign governments and quasi-governmental organizations.

Direct Investments

Since the mid-1980s Orrick lawyers have represented financial institutions as lenders and investors in direct mezzanine transactions relating to real estate acquisitions, leveraged buyouts and other acquisition financings. Historically, Orrick’s mezzanine practice has been based primarily in the United States and in the private market. Most recently, as market and client needs have changed, our lawyers have represented clients in mezzanine transactions in Europe and in connection with securitized offerings where the mezzanine piece is either featured as an unrated instrument issued separately from the senior debt pool being securitized, or packaged with its related senior debt as a component of the securitized pool.

Recent mezzanine finance engagements include the following:

• $20 million senior debt/mezzanine financing for a telecommunications facility in Los Angeles
• $20 million senior debt/mezzanine financing for an existing real estate project
• $10 million purchase of special preferred units in developer/manager of assisted living facilities, together with $3.9 million in participating term loans relating to specific projects
• $20 million senior debt/mezzanine financing for vehicle promoting charitable donation and disposition of commercial real estate, including warrants for common stock
• $71.9 million mezzanine financing structured as a subordinated loan secured by certain apartment units
• $50.5 million senior debt/mezzanine financing (convertible subordinated notes) for REIT acquisition of government leased properties
• $56 million senior debt/mezzanine financing (subordinated notes plus super voting and non-voting common stock) for acquisition of light industrial manufacturing company
• $60 million senior debt/mezzanine financing (priority common stock) for acquisition of control of home textiles manufacturing company
• $10 million senior redeemable exchangeable preferred stock (exchangeable into subordinated exchange notes) for acquisition financing
• $15.5 million mezzanine financing (subordinated notes, exchangeable preferred and warrants) for expansion of food processing company.

Mezzanine Fund Experience

Orrick lawyers have formed mezzanine funds, advised investors in mezzanine funds and provided investment fund regulatory advice for a variety of institutional clients and boutiques. Our work covers a broad range of funds, including those focused on particular geographic regions or sectors of the economy and some of which have been international in scope, including funds involving investment by OPIC. Recent engagements include:

Representation of Sponsors

• Crédit Lyonnais S.A. Orrick represents Crédit Lyonnais as the sponsor of private equity mezzanine funds.
• GarMark Partners, L.P. An Orrick attorney represented GarMark Partners, L.P. in the formation of a $750,000,000 mezzanine fund focused on buyouts, corporate recapitalizations and growth financings.
• Goldman, Sachs & Co. Orrick represents Goldman, Sachs & Co. in connection with its role as sponsor and general partner of Goldman, Sachs’ mezzanine, private equity and hedge funds.

Representation of Investors

Orrick attorneys currently represent a significant number of the largest and most active institutional investors in private equity funds and mezzanine funds, including California Public Employees Retirement System (CalPERS), Oregon Public Employees’ Retirement Fund (OPERF), the New York State Teachers Retirement System (NYSTERS) and CIGNA. A sampling of recent representations of such investors includes review, negotiation and/or closing of investments in the following mezzanine funds:

• Hancock Mezzanine III, L.P.
• Audax Mezzanine Partners, L.P.
• Indigo Capital IV, L.P.
• Landmark Equity Partners XI, L.P.
• CSFB Strategic Partners II, L.P.
• Abry Mezzanine Partners, L.P.
• Avenue Special Situtiations Fund III, L.P.
• Coller International Partners IV, L.P.
• HarbourVest Partners VII – Mezzanine Fund, L.P.
• TCW/Crescent Mezzanine III, L.P.

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