Four months after Cerberus Capital Management said it would sell the Freedom Group—a collection of firearms makers whose products include the semiautomatic Bushmaster rifle used in the Newtown, Connecticut, school shooting that left 26 people, including 20 children, dead last December—the private equity giant has retained Lowenstein Sandler to advise on the potential transaction, The Am Law Daily has learned.
Though Cerberus spent the past several years assembling Madison, North Carolina–based Freedom Group in a series of deals for such well-known gun industry brands as Bushmaster and Remington, pressure from pension funds and other institutional investors in the wake of the school massacre prompted it to announce it was putting the portfolio company up for sale. (In an added wrinkle that the private equity firm has stated did not factor into its decision, Cerberus founder Stephen Feinberg‘s father is a resident of Newtown.)
The Am Law Daily subsequently reported on the various Am Law 100 firms that have handled past transactional assignments for Cerberus—which has an estimated $20 billion in assets under management—and who could thus be in line to pick up the work advising on a potential $1 billion sale of Freedom Group. Reuters reported last week that with major Wall Street banks unwilling to back a Freedom Group acquisition, Feinberg is exploring a private bid for the gunmaker.
Both Milbank, Tweed, Hadley & McCloy and Schulte, Roth & Zabel have long-standing ties to New York–based Cerberus. Milbank, for instance, represented Freedom Group on a planned $200 million initial public offering that Cerberus later canceled in early 2011 as the capital markets stumbled and the company struggled financially.
Schulte has advised Cerberus on several major deals, including its $3.3 billion acquisition of grocery store chain operator Supervalu earlier this year, the $2.5 billion sale of a controlling stake in Japan’s Aozora Bank last year, the $6.3 billion sale of Chrysler Financial in 2011, and the $830 million acquisition of Caritas Christi Health Care in 2010. (Former Schulte partner Mark Neporent serves as Cerberus’s chief operating officer and general counsel.)
It turns out that Lowenstein, a Roseland, New Jersey–based Am Law 200 firm that has acted as counsel to Cerberus on other occasions, has taken a key role advising on certain aspects of a possible Freedom Group deal through investment management group chair Robert Minion.
SEC filings show that Minion, who did not respond to The Am Law Daily‘s request for comment, previously advised Cerberus on its proposed $6.6 billion acquisition of United Rentals in 2007. The private equity firm ultimately backed off its bid for the nation’s largest construction equipment rental company as the U.S. economy teetered on the brink of implosion.
Lowenstein lawyers were called to testify in the resulting Delaware litigation that ended with a decision in favor of Cerberus after it agreed to pay a $100 million breakup fee in connection with the collapse of the United Rentals deal, according to an April 2008 feature story from The American Lawyer. (Milbank represented Lowenstein at trial.) Later that year, Lowenstein represented Cerberus on its unsuccessful bid for Bell Canada, according to our previous reports.
The firm also advised Cerberus on its $1.1 billion acquisition of Tower Automotive out of bankruptcy in 2007. Cerberus exited its investment in the auto parts supplier via a $100 million initial public offering in 2010 that yielded $4 million in legal fees and expenses. Lowenstein represented Tower on the listing.
Besides Neporent, Cerberus’s other in-house lawyers include co–general counsel Andrew Kandel and Seth Plattus—Kandel also serves as chief compliance officer, while Plattus is chief administrative officer—and associate general counsel Sheila Peluso and Joseph Sciacca.
For its part, the Freedom Group hired Jonathan Sprole last August as its new general counsel. He replaced Fredric Roth Jr., who left the company in October 2011. Others attorneys currently working for Freedom Group and its various affiliates include associate general counsel Catherine Wall and attorney Emile Buzaid III, a former West Point graduate who was awarded the Bronze Star for combat in Iraq.
U.S. Senate records show that Mark Barnes—whose Washington, D.C.–based lobby shop Mark Barnes & Associates has handled matters for gun industry group the NFA Owners Association—has done lobbying for the Freedom Group. As for Cerberus, which launched its own lobbying arm in 2006, Senate filings show that Patton Boggs has also handled lobbying work for the private equity firm through Denver-based public policy partner Billy Cooper. (Cooper also serves as a managing director at Cerberus.)
Lobbyists aside, Cerberus remains well connected politically, as The New York Times has reported. Former Vice President J. Danforth "Dan" Quayle is a senior Cerberus managing director and chairman of the private equity firm’s global investments division, while former U.S. Treasury Secretary John Snow serves as a senior managing director and chairman.
The Freedom Group can similarly count on those with ties to the upper echelons of power. Former U.S. generals Michael Hagee and George Joulwan are members of the company’s board of directors, and Freedom Group executive chairman George Kollitides II unsuccessfully ran two years ago for a seat on the board of the National Rife Association.