Parker Drilling announces RSA and Chapter 11 to reduce debt and obtain capital

BY Fraser Tennant

Another victim of the ongoing volatility across the sector, oilfield services provider Parker Drilling Company has entered into a restructuring support agreement (RSA) in a bid to reduce its spiralling debt and obtain access to capital commitments.

To implement the terms of the RSA, Parker has voluntarily filed for Chapter 11 protection. The company’s non-US subsidiaries and certain US subsidiaries are excluded from the filing and will not be affected by the process. Furthermore, Parker intends to seek confirmation of a prearranged plan of reorganisation, for which consenting stakeholders have indicated their support.

Parker’s proposed plan, which is subject to court approval, reduces approximately two-thirds of funded debt and injects $95m of new, fully committed equity capital through a backstopped rights offering. It also contemplates the issuance of a new $210m loan.

In addition, Parker anticipates that its cash flow and existing liquidity will be sufficient to support global operations during the bankruptcy and restructuring process, and has further augmented liquidity with access to $50m in debtor-in-possession (DIP) financing. The lenders under the DIP financing have also committed to fund an exit facility of $50m.

“The steps we are announcing will ensure that we have the appropriate capital structure to take advantage of these opportunities to strategically grow our assets, our global footprint, and our suite of products and services," said Gary Rich, chairman, president and chief executive of Parker Drilling. "We are confident that by resolving our legacy balance sheet issues, we will be able to continue executing a strategy to build greater scale in core markets and expand strategic offerings, while strengthening our drilling and rental tools businesses.”

Parker’s existing customer and vendor contracts are expected to remain in place and be serviced in the ordinary course of business during the bankruptcy and restructuring process. Employee wages and benefits, as well as trade creditors, will be paid in full in the ordinary course of business.

A provider of drilling services and rental tools to the energy industry, Parker serves operators in the inland waters of the US Gulf of Mexico and in select US and international markets.

Mr Rich concluded: “I am confident that the strength of our complementary business lines, combined with a solid financial platform, will position Parker to lead the industry as market conditions improve."

The company has stated that it expects to emerge from bankruptcy protection early in 2019.

News: Parker Drilling files for pre-arranged Chapter 11 reorganization

Increasing automation leading to under-performing workers says new report

BY Fraser Tennant

More than one in four UK workers are “not performing their best at work”, with increasing automation a key concern, according to a report published by Deloitte this week.

In its ‘Voice of the workforce in Europe’ report, Deloitte highlights that 32 percent of UK workers say they are not stimulated by what they do, with 36 percent stating what they do is not meaningful. In comparison, on average, just one in four European workers (24 percent) say they are not stimulated by what they do, and fewer than one in five (18 percent) believe what they do is not meaningful.

“For the UK to remain a globally competitive economy, more must be done to address productivity in our workplaces and the ever widening skills gap,” said Anne-Marie Malley, UK human capital leader at Deloitte. “Businesses are facing an uphill struggle to address these factors which is leading to dissatisfaction, disengagement and despondency among employees. Employers must offer more support to strengthen their worker’s skills and communicate the value their roles are bringing to their company, the economy and ultimately society as a whole.”

The Deloitte report research also highlights that almost half of UK workers are already feeling the impact of automation, with 44 percent of workers stating that some of the tasks they did five years ago have been automated and are now done by robots or software, up from a European average of 38 percent of workers. Additionally, 34 percent in the UK say that entire business processes relevant to their job have been automated over the past five years, up from 30 percent of overall European workers.

Overall, workers across Europe appear relaxed about the future impact of automation. Regarding their own jobs and how they will evolve over the next 10 years, about three-quarters (76 percent) of respondents say they only expect slow, small, or no change at all. In the UK, four in five (83 percent) do not expect any major changes to their job over the next decade.

“The reality is that the future of work is now, and automation is already impacting day-to-day roles,” said Ms Malley. “Awareness will provoke action, so it is important for businesses to educate workers on how their roles will be augmented by technology over the next decade.”

Deloitte’s research was based on the attitudes and views of more than 15,000 people across 10 European countries, including 2043 from the UK.

Report: Voice of the workforce in Europe

Cyber security M&A climbs as attacks increase

BY Richard Summerfield

Cyber security M&A is on the rise, as a result of the increasing number of successful, high-profile cyber attacks, the continued digitalisation of businesses and the proliferation of new regulations, such as the European Union’s General Data Protection Regulation (GDPR), according to Hampleton Partners’ 2018 Cybersecurity M&A Market Report.

“Hacking is the newest form of warfare against businesses as well as nation states. The average cost of a single data breach is now € 3 million, up by six percent in a year, plus the reputational damage which can be catastrophic,” said Henrik Jeberg, a director at Hampleton Partners. “Given the increasing market demand for cybersecurity solutions due to regulation, digitisation, high profile hacks and new technologies requiring security, we are not surprised to see a highly active M&A market for cybersecurity assets at high valuations. I expect cybersecurity to remain a hot topic in M&A, even if we go into a period of more volatile financial markets.”

There have been a number of notable M&A deals in the tech space this year, particularly in H2. The report identifies the identity and access management subsector as one of the most notable areas of activity. The space saw a number of large deals, including acquisitions by Verimatrix and Cisco.

The private equity (PE) industry has also become an active participant in the cyber security market. Indeed, PE investors have become top bidders for a number of large cyber security assets. Thoma Bravo, TPG Capital, Francesco Partners and Vista Equity Partners have all increased their investments in the cyber security space this year.

The importance of cyber security is becoming increasingly evident, particularly as the average cost of a cyber breach continues to rise. In 2017, the average cost of a single data breach rose 6 percent to €3m per breach. Moving forward, it seems likely that the cyber security space will remain a key target for acquirers in the months ahead.

Report: 2018 Cybersecurity M&A Market Report

GSK takes Tesaro in $5.1bn deal

BY Richard Summerfield

GlaxoSmithKline has agreed to acquire US cancer specialist Tesaro in a deal worth $5.1bn, including Tesaro’s outstanding debt.

Under the terms of the deal, GSK, the UK’s largest drug manufacturer, will pay around $75 a share to acquire Tesaor, a premium of 110 percent on the company’s 30 day average price and a premium of 60 percent on the stock’s closing price on Friday 30 November, the last day of trading before the deal was announced. The transaction is expected to complete in the first quarter of 2019, subject to the satisfaction of customary closing conditions.

The deal is a notable for GSK, granting the company access to Tesaro’s drug Zejula – a poly ADP ribose polymerase (PARP) inhibitor approved for treating ovarian cancer. PARP inhibitors block a family of DNA-repair proteins in cancer cells. Zejula is also being evaluated as a potential treatment for lung, breast and prostate cancer.

Zejula brought in $166m in revenue in the first nine months of 2018, with third-quarter sales growing more than 60 percent. According to Refinitiv data, industry analysts, on average, expect annual Zejula sales to reach $1bn by 2023. Tesaro expects sale of Zejula to be in the $233m to $238m range this year.

“The acquisition of Tesaro will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities”, said Emma Walmsley, chief executive of GSK. “This combination will support our aim to deliver long-term sustainable growth and is consistent with our capital allocation priorities. We look forward to working with Tesaro talented team to bring valuable new medicines to patients.”

“This transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer to endure,” said Lonnie Moulder, chief executive of Tesaro. “Our board and management team are very pleased to announce this transaction, and we are grateful to the management team at GSK for their tremendous vision and the opportunity to preserve and build upon the impact we have had in the cancer community to date.”

News: GSK slides after buying cancer firm Tesaro for hefty $5.1 billion

Nexstar acquires Tribune Media in $6.4bn deal

BY Fraser Tennant

In a deal which makes it one of the largest regional TV station operators in the US, Nexstar Media Group, Inc is to acquire Tribune Media Company in a transaction valued at $6.4bn.

The definitive merger agreement will see Nexstar acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction, including the assumption of Tribune Media’s outstanding debt.

The combination of two leading companies with complementary national coverage will reach approximately 39 percent of US television households. Furthermore, the combined entity will be among the leading providers of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms.

“We have long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies,” said Perry Sook, chairman, president and chief executive of Nexstar. “We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate.” 

The transaction has been approved by the boards of directors of both companies.

“We are delighted to have reached this agreement with Nexstar as it provides Tribune shareholders with substantial value and a well-defined path to closing,” said Peter Kern, chief executive of Tribune Media. “Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets. We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers.”

The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank.

Expected to close late in the third quarter of 2019, the Nexstar/Tribune Media transaction is subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Mr Kern concluded: “I look forward to working closely with the Nexstar team to deliver on the value of this compelling combination and to ensure a smooth transition and integration of our companies.”

News: Nexstar clinches deal to acquire Tribune Media