STACY KANTER, Skadden
Deal in Brief: Realogy IPO
Deal Value: $1.2 billion
Firm’s Role: Issuer’s Counsel
Deal Trivia: To commemorate the IPO, everyone on the team was given a tiny house.
In 2008, when Apollo Global Management first asked Stacy Kanter, a corporate finance partner at Skadden, Arps, Slate, Meagher & Flom, to help with the debt restructuring of Realogy Holding Corp. (the private equity giant owned the real estate services business), she thought it would be a quick, straightforward matter. "I remember meeting with Apollo on the same day I was trying to make it to my son’s freshman-year parents’ day event," says Kanter. "We thought it would be a small trans­action—a sprint."
Four years later, in October 2012—and five months after Kanter’s son graduated from college—that "small transaction" finally closed, culminating in a $1.2 billion initial public offering. It was the biggest private equity–backed IPO in the United States last year, according to Dealogic. But what was truly remarkable about the IPO—apart from the scale—is that it was completed at all.
In 2007 Apollo acquired Realogy in an $8 billion leveraged buyout—saddling the owner of Century 21 and Coldwell Banker with over $6 billion in debt. (Apollo put in $2 billion of its own money.) At about the same time, the bottom fell out of the housing market, essentially devastating Realogy’s entire business. Small wonder, then, that Realogy was not expected to survive.
How Realogy rose from the ashes and managed a successful IPO is a story of corporate resolution, creative problem-solving, and dogged hard work. According to key players at Apollo and Realogy, and underwriter’s counsel at Simpson Thacher & Bartlett, Kanter was a critical player who pumped out a steady stream of solutions in the midst of an ever-changing situation. "Stacy and her team helped us deal with a complicated capital structure," says Marilyn Wasser, Realogy’s general counsel. "It was like playing chess on several levels." That sentiment is echoed by Simpson partner Art Robinson: "This was not a cookie-cutter deal. It was a complex transaction."
One of the early challenges facing Kanter and her client was overcoming the opposition of billionaire investor Carl Icahn, a key debt holder who fought against the company’s original restructuring. "Icahn was initially a stumbling block, but then we reached a deal almost a year later after an all-night negotiation," says Kanter.
Other transactions followed, including securing new-money second-lien loans to keep Realogy going and negotiations with hedge fund giant John Paulson involving a debt exchange. In early 2011 Realogy entered a pivotal agreement with debt holders that extended the maturities of most of the company’s debt, enabling it to weather the depressed housing market. Littered along the way were complicated tax, antitrust, and security law issues. In all, 20 Skadden lawyers were involved in five major transactions that ultimately cleared the way to Realogy’s IPO.
Kanter’s organization and composure helped make it all possible, says her client. "It took intense, committed lawyering. Everything was a building block to something else," says Wasser. She adds: "We at Apollo are demanding clients. . . . Skadden worked their hearts out—whether it was 3 a.m., 5 a.m., holidays or weekends, there was always someone there, and Stacy was at the center of it all."
Kanter, in turn, gives a lot of credit to Apollo. Even at some very low points—"when Apollo’s equity [in Realogy] was basically worthless"—Kanter says the company stood steadfast: "They recognized the fundamentals of the business and knew it was a good business." Apollo’s commitment, she says, made it easier to be optimistic: "Everyone was rooting for the company."
Kanter says Realogy represents, in some sense, a microcosm of the economic cycle in the last four years. "Realogy is so emblematic of the financial crisis," starting with its acquisition before the economic downfall, stirrings of recovery, to the IPO. "In the end, it was one of those things where the sun, moon, and stars were perfectly aligned. . . . It was thrilling."