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Lawyers in the San Francisco office of Orrick, Herrington & Sutcliffe recently completed a $3 billion tobacco securitization bond deal for the state of California. “This is the largest tobacco securitization that has been and probably ever will be done in the country,” said Roger Davis, chair of Orrick’s public finance department, who led the deal. The deal is part of a $206 billion settlement of lawsuits by states against cigarette makers for Medicaid costs stemming from smoking-related illnesses. The money will be paid out in the next 20 years. “Tobacco securitizations are more complicated than most municipal transactions,” Davis said. “We began this one about a year ago with the creation of legislation to authorize the transaction.” The legislation passed in the fall and became effective Jan. 1. In addition to its contract with the state of California for securitizing tobacco proceeds, Orrick has represented San Diego, Sacramento and Sonoma counties and the states of Wisconsin, South Dakota, South Carolina, Washington and Oregon in securitization deals. This deal comprises two bonds: a $2.6 billion dollar tobacco settlement asset-backed bond at a fixed rate and a $375 million bond at auction rate. “It is the first of two issues planned by the state of California — the second tranche is expected to be in excess of $2 billion and to be issued between now and April,” Davis said. He expects Orrick to handle a least a dozen more tobacco securitization deals in 2003. In addition to Davis, Los Angeles-based tax partner Larry Sobel and San Francisco associates David Stevens and Winnie Tsien worked on the deal. New York’s Hawkins, Delafield & Wood represented Bear Stearns, the lead manager for the transaction. S2IO INC. San Jose-based startup S2io Inc., a maker of an advanced 10-gigabit per second ethernet technology, recently completed an $18 million second funding round. Lawyers in the San Francisco office of Kirkpatrick & Lockhart represented the company. Attorneys in the Palo Alto office of Cooley Godward represented Menlo Ventures, which joined the company’s current Canadian investors for this second round. “The Series B round of funding will be used to support the rapid expansion of S2io’s product and sales development and general operating expenses,” said lead Kirkpatrick partner Mark Davis, in a press release. In addition to San Jose, S2io has an office in Ottawa, Canada. LaBarge Weinstein served as S2io’s Canadian counsel. In addition to Davis, associate Marc Baluda worked on the deal in Kirkpatrick’s San Francisco office. New York-based tax partner Scott Newman also worked on the deal. Cooley partner Vincent Pangrazio led the deal for Menlo Ventures. Associate Thomas Kennedy and Broomfield, Colo.-based partner Mark Hrenya also worked on the deal.

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