April 9, 2012 4:49 PM

Schulte, SC Grab Roles on ATT’s $950 Million Sale of Yellow Pages

Posted by Brian Baxter

Three years after Sullivan Cromwell and Schulte, Roth Zabel faced off from one another on Chrysler’s federal government-backed sale to Fiat, the two firms have landed lead roles on ATT’s $950 million agreement to sell a majority stake in its Yellow Pages directory division to private equity firm Cerberus Capital Management.

ATT announced Monday that a Cerberus affiliate would acquire the company’s ATT Advertising Solutions and ATT Interactive businesses. Bloomberg reports that ATT will receive $750 million in cash and a $200 million promissory note as part of the deal, which will also allow ATT to hold on to 47 percent of both units as it focuses on more lucrative operations such as its mobile phones business.

Sullivan Cromwell is advising ATT on the transaction, according to a spokeswoman for the Dallas-based telecommunications giant. The firm served as MA counsel to ATT last year on its ill-fated $39 billion bid to acquire T-Mobile USA from Deutsche Telekom, a proposed deal that finally collapsed last December after meeting stiff regulatory opposition.

ATT is being advised on the Yellow Pages sale by a team at SC that includes MA partners Joseph Frumkin, Eric Krautheimer, and Krishna Veeraraghavan; finance partners Robert Downes and Hydee Feldstein; tax partner Andrew Mason; employee benefits partner Matthew Friestedt and special counsel Henrik Patel; IP partners Nader Mousavi and Spencer Simon; project finance and restructuring partners Erik Lindauer and Robinson Lacy; restructuring special counsel Michael Torkin; and environmental special counsel Matthew Brennan.

ATT’s general counsel is D. Wayne Watts, while former Akin Gump Strauss Hauer  Feld partner James Cicconi serves as the company’s executive vice president for external and legislative affairs. Reuben Anderson, a senior litigation partner at Phelps Dunbar in Jackson, Mississippi, is a member of ATT’s board of directors.

New York-based Cerberus has turned to its longtime outside lawyers from Schulte Roth for counsel on the acquisition from ATT. Schulte has enjoyed a close relationship with Cerberus over the years, having racked up millions in fees advising former portfolio company Chrysler during the automaker’s Chapter 11 case three years ago.

For the Yellow Pages purchase, Cerberus is relying on a Schulte Roth team that includes MA partners Andre Weiss and David Rosewater; tax chair Alan Waldenberg; finance chair Frederic Ragucci and finance partner Kirby Chin; IP and technology chair Robert Kiesel; environmental chair Howard Epstein; real estate partners Robert Nash and Julian Wise; employee benefits cochair Ronald Richman and employee benefits partner Laurence Moss; and MA special counsel Kimberly Monroe.

Cerberus’s chief operating officer and general counsel, former Schulte partner Mark Neporent, and the general counsel for Cerberus’s operations and advisory arm, Lisa Ann Gray, are leading an in-house team on the proposed transaction.

Schulte Roth most recently advised Cerberus on aborted $1.1 billion acquisition of bankrupt Innkeepers USA last year, which ended in litigation after the hotel owner sought to keep the deal alive. Schulte also handled Cerberus’s $6.3 billion sale of Chrysler Financial to TD Bank last year, as well as the private equity firm’s entry into the Catholic health care market through its $830 million purchase of Boston-based Caritas Christi Health Care in 2010.

As for ATT, the company’s proposed deal with Cerberus allows it to exit a business that has been declining in recent years because of increased competition from Internet-based companies like Google and Yelp, which raised millions through an initial public offering last month. ATT archrival Verizon Communications spun-off its former Yellow Pages unit, Idearc, back in 2006, and the telephone directory business found itself in Chapter 11 three years later.

In a statement announcing its deal with Cerberus, ATT expects the sale of its advertising solutions and interactive units to close by mid-2012, pending shareholder and regulatory approvals.

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