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Simpson Thacher is representing Bear Stearns and a newly-formed partnership through which Bear Stearns and other private equity investors will invest $610 million in Doral Financial Corp. The partnership will acquire a 90% stake in Doral Financial Corp., parent company of one of the largest banks in Puerto Rico, as part of a recapitalization transaction that will resolve Doral’s liquidity needs and restore it to financial soundness.

The transaction is a ground-breaking precedent for private equity investment in the financial services sector. The Simpson Thacher team developed an innovative investment structure for this transaction that allows the private equity investors to manage the company with majority representation on its board of directors but avoids the need for any of the investors to register with the Federal Reserve Board or other banking regulators. The proposed transaction is expected to close in mid-July.

The Simpson Thacher team working on this transaction includes: Lee Meyerson, Gary Rice, Ellen Patterson, Jacob Kleinman and Jonathan Strauss (M&A); Linda Martin and Elisa Alcabes (Litigation); John Creed and Sean Austin (Tax); Jeanne Annaruma and Jarrett Hoffman (Employee Benefits); and Peter Pantaleo (Bankruptcy).