McKee Nelson Looks to Expand Its Municipal Finance Products Business

The McKee Nelson LLP law firm hired a partner and elevated several other current attorneys to partner, in an effort to grow its municipal financial products business at a time of widespread market turmoil.

Tom Glushko, Rich Davis, and Natan Leyva were all elevated to partner status. Glushko, specifically, has been instrumental in bringing the municipal derivatives aspect of the firm into prominence, said William Gray, a partner. Glushko joined McKee two-and-a-half years ago from Orrick, Herrington & Sutcliffe LLP for the purpose of building McKee's practice in municipal structured products.

Joyce Gorman will bring more than 30 years experience, most recently from the law firm of Cadwalader, Wickersham & Taft LLP where she had worked since 1998. Gorman will work with McKee's financial institution clients in developing and managing tender-option bond programs, structuring multi-million dollar gas prepay deals, and with work on other municipal derivative solutions.

"The timing was serendipitous," Gorman said in an interview yesterday. "Now that the market is in turmoil we are finding that a lot clients need the help of people with a lot of experience."

Glushko and Michael Voldstad, another partner, joined Gray at McKee in 2005 to build a municipal financial products group. At the time, McKee was well known for its work on the structured finance side of the business and the attorneys thought it would be a logical fit. They started by structuring and advising on tender-option bonds programs for some of Wall Street's largest banks. The firm now manages eight to 10 programs.

"It seemed logical to us that TOBs activities would sit well with the firms's overall commitment to the area," Gray said. "It is a logical marriage of tax, structural finance, and muni derivatives."

The municipal financial products group now includes five partners, with support from a partner specializing in tax issues, two senior counsels, and a number of associates. McKee will continue to work to find solutions for investment banks and issuers for the various dislocations currently affecting the market.

Most recently, Gray said, McKee worked with Merrill Lynch & Co. to restructure auction-rate securities for the University of Pennsylvania. In that structure - subsequently used by Trinity Health Credit Group and Premier Health Partners in the Midwest - the auction period was extended to 270 days, at the end of which an unconditional tender right was offered to investors to ensure liquidity.

In the case of Trinity, the structure helped them shave their interest rate down from more than 12% after two auctions failed, to 2.95% earlier this month. And it became money market eligible, accessing a large investor base normally kept out of auction-rate deals.

Based on the success of that and other transactions, the attorneys at McKee will continue to seek solutions for their clients.

"Some of our clients are already looking beyond the present turmoil to future opportunities when things stabilize," Gorman said.

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