Nova Chemicals Corp. negotiated its $2.3 billion agreement to sell itself to Abu Dhabi state-owned International Petroleum Investment Co. in the face of two ominous specters: the brutal downturn in the chemicals business worldwide and the Dec. 29 announcement that Kuwait Petroleum Corp. and Petrochemical Industries Co. KSC had pulled out of a joint venture agreement with Dow Chemical Co. The Kuwaitis' move imperiled Dow's planned $18 billion merger with Rohm and Haas Co. and was another example of a deal that fell apart before closing.

Like its industry, Calgary, Alberta-based Nova has been hit hard by the recession. In the fourth quarter of 2008, it had a net loss of $214 million, or $2.56 per share, compared with net income of $126 million, or $1.51 per share, in the fourth quarter of 2007. Nova had $250 million in bonds coming due in April. In addition, the company's lenders demanded that Nova come up with a further $100 million in capital by the end of February and an additional $100 million by the end of the second quarter.

Nova's shareholders will vote on the deal in April, and the short time between the deal's announcement on Feb. 23 and the shareholder vote should reduce the risk that it won't close. But Nova also got a seller-favorable material adverse effects clause, the contractual provision that sets out what adverse changes to a target would allow a buyer to walk.

For legal advice, Nova tapped Wachtell, Lipton, Rosen & Katz in New York and Osler, Hoskin & Harcourt LLP in Canada. Nova CEO Jeff Lipton met Wachtell's David Katz when Lipton served on the board of Katz client Hercules Inc. Oslers partners Brian Levitt, John Macfarlane and Stan Magidson also worked on the deal. Oslers first advised Nova on its 1988 hostile takeover of Canadian rival Polysar Energy & Chemical Corp.

Nova is also using two financial advisers. Avi Lewittes, David Bradley, Chris Rhee and Sean Weissenberger of UBS Investment Bank are working with Michael Norris and Peter Buzzi of RBC Capital Markets Corp.

Philip Brown led a team at Torys LLP in Toronto that is handling its first assignment for Ipic. John Emanoilidis in Toronto coordinated the work on the merger agreement, while Jonathan Wiener in New York took that role on the loan papers. Ipic also used regular outside counsel, Clifford Chance LLP, where John Graham and Jonathan Olier in Abu Dhabi pitched in on the corporate side, with William Blumenthal and Beth Chen in Washington on antitrust and counsel George Kleinfeld on international trade. For banking advice, Ipic is using Rob Chrétien and Hugo Heath at HSBC Holdings plc.