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Name and title: Craig Newman, executive managing director and general counsel Age: 49 Takeover, makeover: Patriarch Partners LLC was founded in 2000 by Lynn Tilton, a former banker and debt trader at Goldman Sachs and Morgan Stanley. The $5 billion private fund holds majority or minority stakes in 67 companies in media, communications, entertainment, aerospace, transportation, manufacturing, textiles and employment placement. What the companies hold in common is Patriarch’s confidence that they can be salvaged. In a March 2004 interview for the SSG Capital Advisors LP newsletter, Tilton characterized Patriarch Partners as “value investors, and our goal is to rebuild companies by granting them the gift of time.” For example, Patriarch spotted American LaFrance LLC, builder of fire and rescue apparatus since 1832, which had been cast adrift as a subsidiary of Freightliner LLC, itself a subsidiary of DaimlerChrysler A.G. Patriarch purchased American LaFrance’s debt in December 2005. At the end of April, Patriarch named new senior managers and announced plans to open a new assembly plant in South Carolina. “Like any company that had been ignored by its parent company, it had its issues. But that is our sweet spot,” Newman said. Patriarch is similarly immersed in turning around MD Helicopters Inc., a manufacturer of commercial and military choppers in Mesa, Ariz. The company announced the appointment of six high-level executives in January. “Patriarch is long-term money. We don’t flip companies, we put in the resources to realize long-term value,” Newman said. “Generally we work with the existing management, but sometimes new blood is necessary. We have a deep, very talented bench of turnaround experts who bring tremendous value.” Legal team: Patriarch’s law department was a one-lawyer shop until recently, but is expanding to keep pace with acquisitions and establish a new fund. Newman recently hired an attorney for transactional work and is recruiting two more for transactions and litigation. Diligence and tax issues are recurring demands that Patriarch prefers to meet in-house. “It is very legal-intensive when you deal with distressed companies and deep investing. We have to look under the hood to see if we are interested in purchasing,” Newman said. “The more we develop in-house expertise in tax and diligence issues that come up over and over, the more we avoid inventing the wheel over and over.” Daily duties: Newman’s work falls into three broad categories-acquisition of new companies, immersion in the legal issues of the 67 companies already in the portfolio, and regulatory compliance. “Between the large number of transactions we are working on and the activities of the portfolio companies, it’s impossible to predict what will arise on any given day,” he said. “I am in regular contact with the general counsels and legal teams at the portfolio companies. That takes up a fair portion of each day.” On a typical day Newman talks with Tilton on the telephone or in person a half-dozen times, just dealing with issues as they arise. “We do our longer-term planning and status calls early in the morning at least once a week and on the weekends,” Newman said. “I’ll usually speak with Lynn on Sunday afternoons to review all open issues and walk through a preview of coming attractions for the next week. Periodically, we have senior executive retreats. It’s important to reflect about our longer-term business objectives away from the day-to-day activity.” Regulatory compliance is a big part both of due diligence and managing the company when the acquisition is complete. Various Patriarch companies deal with import/export controls, toxic-substance liability and customs duties or classifications. “In most cases, the regulatory issues exist on both the federal and state level,” Newman said. Outside counsel: Newman supplements his lean in-house legal team with a network of outside firms. He taps the New York and Washington offices of Washington-based Arnold & Porter for intellectual property, international regulatory issues and litigation. Weil, Gotshal & Manges of New York assists with securities and funds. Hughes Hubbard & Reed of New York focuses on general transactional matters. Brune & Richard of New York adds to the litigation firepower. Richards Kibbe & Orbe of New York helps with both general transaction work and bankruptcy. “We choose outside counsel based on the lawyers we want to hire, as opposed to hiring the firm,” Newman said. “Once we have a green light to make an acquisition, we define the deal in-house, then engage outside counsel.”The fund and many portfolio companies conduct business globally, which brings new demands to the legal department. “An increasing number of transactions, at both the fund and portfolio-company level, have been outside the United States, including Europe, Asia and the Middle East,” Newman said. “These transactions raise not only legal issues under local law, but require us to address the interplay with U.S. law and regulation such as bankruptcy and reorganization, corporate governance, creditors rights, secured transactions, import/export control issues, customs and licensing.” Route to present position: After taking his law degree in 1984 from the University of Detroit Law School, Newman clerked for Judge Philip Pratt, then chief of the U.S. District Court for the Eastern District of Michigan. Following his clerkship, Newman joined Cahill Gordon & Reindel in New York, where he litigated media, libel and First Amendment cases. Newman joined Arnold & Porter’s New York office in 1989 and made partner in 1992. He left in 1996 to become general counsel of Americast, a media venture of The Walt Disney Co., Ameritech, BellSouth Corp., GTE Corp. and Southern New England Telecommunications Corp. Newman was responsible for all transactional, licensing, intellectual property, business affairs and general legal matters. Newman rejoined Arnold & Porter as a partner in the New York office in 1999. Tilton hired him for Patriarch in 2005. Personal: Newman is an avid runner and bicyclist. He has completed a number of marathons and annually completes a 250-mile bicycle trek to raise funds for Special Olympics. He holds a masters degree from the University of Missouri-Columbia School of Journalism. He and his wife, Susan, have two children: Rachel, 16, and Jonathan, 13. - Peter Page

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