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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Wednesday, November 24

Date:

24-11-2010 14:58:57
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Wednesday -- November 24, 2010
Email Dan | Follow Dan on Twitter | Subscribe

Wednesday Warblings
The sun is shining, the insider trading probe is expanding and were just 24 hours away from indulging in
tryptophan-induced comas. In other words, its time for some Wednesday Warblings (well, for us suckers
who havent already checked out):
First up were tons of comments related to yesterdays note on Irelands corporate tax rate. Scott writes:
Dan, your narrow cause and effect analysis of McCain's statements and Ireland's economy are nothing
short of dopey. This inane commentary pleasures only you, not your readers. No more of this or half your
audience will stop reading your emails entirely."
David: Dan, you say that Irelands problems are because of a low corporate tax rate, but make no effort to
prove your assertion. Maybe their woes are due to over-extending themselves on construction loans and
having far too liberal access to cheap money Higher taxes take money away from productive activities
and retard economic recovery.
Then there is my favorite reply, from Neil: USA has the second-highest (by just a hair) corporate taxes in
the world to Japan. Japan's is an economy to emulate? See what simplistic analysis to score a political
point does? By the way, we have had and continue to have our bailout (prior to Ireland's) by printing more
of the world's reserve currency. Ireland now is having its bailout, but does not have the luxury of printing its
own monopoly money so it is borrowing from the Germans and Brits et al. Bottom line, McCain's not

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president, nor is Bush nor Karl Rove nor Sarah Palin nor Bristol Palin nor Rush Limbaugh nor Bill O'Reilly
nor the Tea Party nor the Monster Raving Looney Party nor Rand Paul nor Ayn Rand nor Ron Paul nor L.
Ron Hubbard nor Old Mother Hubbard or any of the other bogeymen, you guys like to moan about. Obama
is. Sorry mate!
For starters, I do wish Old Mother Hubbard were president. Just so that she could move out of that
crowded shoe. More importantly: I never argued cause and effect. In fact, I kind of argued the opposite
(albeit unclearly, it seems).
My point was not that Ireland's corporate tax rate caused the nation's financial crisis. It was that Ireland's
corporate tax rate did not prevent the nation's financial crisis.
McCain made his statements in the fall of 2008, when America was in the most panicked phase of its
recession. His discussion of Ireland was in that context -- suggesting that were we to follow the Irish model,
perhaps we wouldn't be in such a mess. Considering that Ireland itself has now found itself similarly dirty,
McCain's certainty can no longer hold water.
It is indeed possible that Ireland would be in even worse shape had it been using a higher corporate tax
rate. It also is possible that things would be better. We do not know. Neither did McCain.
*** Next up were a couple of replies to Mondays note on the SECs proposed definition of venture
capital funds. Greg: We have redemption rights in virtually 100% of our deals and always have. That said,
its only ever been invoked once in our firms history, so we probably can safely get rid of it with little to no
effort.
Diane: You are right that the SEC needs to get much more specific. Otherwise well always be looking
over our shoulder, wondering if an audit is on the way. We obviously dont want to pay the fees associated
with registration, but if we had to choose, wed probably choose certainty.
*** Correction: A number of readers pointed out that I erred in details on the upcoming memorial service
for Peter Rip. The correct date is next Tuesday, November 30.
*** Housekeeping: There will not be a Term Sheet email tomorrow or Friday, but Ill be back and chipper
on Monday. Have a great holiday

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The Big Deal

Wellspring Capital Management is in advanced talks to buy Hooters of America Inc. Yes, that Hooters
(as opposed to, say, the band that sang Day by Day).

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The process began nearly a year ago, with North Point Advisors helping to manage the process. No word
yet on possible price, although the Atlanta-based franchiser is reported to generate around $1 billion in
annual revenue.
This is a big deal for two reasons. First, we broke it first yesterday on the Term Sheet blog, and Im a
shameless self-promoter. Second, its an extremely complicated situation.
Hooters of America doesnt actually oversee all Hooters-branded locations. Some including a Manhattan
restaurant and Las Vegas casino are still owned by a small group of Clearwater, Fla.-based co-founders.
Moreover, the sale was launched as part of a proposed settlement between feuding heirs to the estate of
Richard Brooks, the former Hooters of America boss who passed away in 2006.
More info here, including a video on how the company was founded.

VC Deals
Aquamarine Power, a British wave energy developer, has raised 11 million in new VC funding. ABB led
the round, and was joined by return backer SSE Venture Capital. www.aquamarinepower.com
Helix Therapeutics, a New Haven, Conn.-based developer of therapies for genetic disorders like sickle
cell anemia, has raised $2.5 million in VC funding from Canaan Partners and Connecticut Innovations.
www.helixtherapeutics.com
AisleBuyer, a Boston-based developer of mobile checkout solutions, has raised $4 million in private equity
and debt funding. The equity came from Richard Heisi Jr., while the debt was provided by Silicon Valley
Bank. www.aislebuyer.com
OnAir3G, a Moscow-based developer of a voice-enabled mobile social networking platform, has raised $2
million in VC funding from Runa Capital. www.runacap.com
Svpply, a Boston-based retail bookmarking and recommendation service, has raised a $550,000 in seed
funding. Backers include Spark Capital, SV Angels, Dennis Crowley and Jason Hirschhorn.
www.svpply.com

Private Equity Deals

3i Group has agreed to acquire Stork Materials Technology, the materials testing unit of Stork NV, for
$205 million. www.3i.com
Bain Capital Partners has completed its $1.8 billion, or $65.40 per share, take-private acquisition of The
Gymboree Corp. www.baincapital.com
The Carlyle Group has acquired a portfolio of six European retailers from Primondo Specialty Group
GmbH, a subsidiary of Arcandor AG. The businesses are: Versandhaus Walz, Planet Sports, BonA Parte,
Elgance, Mirabeau and Vertbaudet Germany (50%). No financial terms were disclosed. www.carlyle.com
CVC Capital Partners has exercised its 157 million option to acquire an additional 35% stake in Spanish
television company Cable R from Caixanova. The deal raises CVCs total stake in Cable R to 70%, with
Caixanova retaining the other 30 percent.

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KSL Capital Partners has agreed to acquire The Squaw Valley Development Co., including the Squaw
Valley USA ski operations, the Village at Squaw Valley and related real estate holdings. No financial terms
were disclosed, except that KSL has committed more than $50 million for capital improvements. Squaw
Valley is located near Lake Tahoe, and played host to the 1960 Olympic Winter Games.
www.kslcapital.com
Marlin Equity Partners has acquired Phoenix Technologies Ltd. (Nasdaq: PTEC), a Milpitas, Calif.
based provider of core systems software, for $4.20 per share. Marlin transacted the deal via its Pharaoh
Acquisition LLC platform, which is minority-owned by Continuum Capital Partners. www.marlinequity.com
ProSight Specialty Insurance, a portfolio company of GS Capital Partners and TPG Capital, has
completed its acquisition of NYMagic Inc. (NYSE: NYM), an underwriter of ocean marine, inland marine
and non-marine liability insurance. The deal was valued at around $230 million, or $25.75 per NYMagic
share. www.nymagic.com
USI Holdings Corp., a Briarcliff Manor, N.Y.-based portfolio company of GS Capital Partners, has
completed its acquisition of Kinloch, a West Orange, N.J.-based provider of commercial property &
casualty and employee benefits insurance for middle-market businesses. No financial terms were
disclosed. www.usi.biz

PE-backed IPOs
E-Commerce China DangDang Inc., a Beijing-based B2C ecommerce company in China (with an
emphasis on books), has set its IPO to 17 million American Depository Shares being offered at between
$11 and $13 per share. It plans to trade on the NYSE under ticker symbol DADA, with Morgan Stanley and
Credit Suisse serving as co-lead underwriters. Shareholders include Tiger Global Private Investment
Partners, DCM-Doll Capital Management and IDG Technology Ventures. www.dangdang.com
iSoftStone Holdings Ltd., a Beijing-based provider of IT consulting and software services, has filed for a
$50 million IPO. It plans to trade on the NYSE under ticker symbol ISS, with Morgan Stanley, J.P. Morgan,
and UBS serving as co-lead underwriters. iSoftStone has raised funding from AsiaVest Partners, Infotech
Ventures, Mitsui & Co. and Fidelity Asia Ventures. www.isoftstone.com
Kinder Morgan, a Houston, Texas-based pipeline company, has filed for a $1.5 billion IPO. It plans to
trade on the NYSE, with Goldman Sachs and Barclays Capital serving as co-lead underwriters. The
company was taken private in 2007 by The Carlyle Group, GS Capital Partners, Highstar Capital and
Riverstone Holdings. All IPO proceeds will go to selling shareholders. www.kindermorgan.com

Exits
Centerbridge Capital Partners is seeking buyers for Green Tree Servicing LLC, according to
Bloomberg. Centerbridge acquired the Palatine, Ill.-based loan servicer in 2007 for approximately $1 billion,
from Fortress Investment Group and Cerberus Capital Management.
Cerberus Capital Management is seeking buyers for Chrysler Financial, which is valued at between $6
billion and $7 billion, according to Bloomberg. Cerberus originally acquired Chrysler Financial as part of its
2007 of automaker Chrysler, and held onto the unit after Chrysler itself filed for bankruptcy.
www.chryslerfinancial.com

Other Deals

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SABMiller PLC, with worlds second largest brewer by volume, has agreed to acquire
Argentinian wine brands Isenbeck and Warsteiner. No financial terms were disclosed.

Firms & Funds

The Blackstone Group has agreed to manage the Asian real estate assets of Bank of America Merrill
Lynch, and to serve as general partner of the Merrill Lynch Asian Real Estate Opportunity Fund. No
financial terms were disclosed. The current portfolio is valued at approximately $2 billion.
www.blackstone.com

Moving In, Up and On

Catherine Ngo has joined Central Pacific Financial Corp. (NYSE: CPF) as executive vice president and
CFO. She previously was a general partner with Startup Capital Ventures. www.centralpacificbank.com
Thilo Sautter has joined Cinven as co-head of German operations. He previously was a partner with
Investcorp. www.cinven.com

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