700 stores to close as Mattress Firm files for Chapter 11 protection

BY Fraser Tennant

Due to what it describes as “significant operational challenges”, specialty mattress retailer Mattress Firm has filed for Chapter 11 bankruptcy protection in order to strengthen its balance sheet and optimise its store footprint.

The filing at the US Bankruptcy Court in Delaware gives the company access to new financing to support the business, establishes an efficient and orderly process for closing certain economically inefficient store locations, and provides for all trade creditors to continue being paid in full for goods and services provided.

Court documents reveal that Mattress Firm is projected to lose approximately $150m in fiscal year 2018. The company also has more than $1bn in liabilities and more than 50,000 creditors, with Atlanta-based mattress maker Simmons Manufacturing Co. its largest creditor at almost $65m.

“The process we have initiated will allow us to strengthen our balance sheet and accelerate the optimisation of our store portfolio,” said Steve Stagner, executive chairman, president and chief executive of Mattress Firm. “Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other.”

In conjunction with its restructuring plan, Mattress Firm has received commitments for approximately $250m in debtor-in-possession (DIP) financing, which, subject to court approval, will be available to support its ongoing operations during the Chapter 11 proceedings.

“We intend to use the additional liquidity from these actions to improve our product offering, provide greater value to our customers, open new stores in new markets, and strategically expand in existing markets where we see the greatest opportunities to serve our customers,” added Mr Stanger.

The company expects to complete the Chapter 11 restructuring process within two months and has announced commitments for $525m of senior secured credit facilities to fund its emergence from bankruptcy.

Founded in 1986, Mattress Firm has grown to be the largest specialty mattress retailer in the US, with stores in 49 states across the country. In 2016, the company was acquired by Steinhoff International Holdings, N.V.

Mr Stagner concluded: “We thank our suppliers and partners for their continued support. We will continue to provide unmatched value to our customers by offering the best quality beds at prices that fit any budget today, tomorrow and into the future.”

News: Steinhoff's Mattress Firm files for bankruptcy protection, closes stores

British Steel cuts 400 jobs in bid to secure “long-term future”

BY Fraser Tennant

In a streamlining process designed to ensure its long-term growth, British Steel is to cut 400 jobs at its sites in the UK, Ireland, France and the Netherlands – approximately 10 percent of its 5000-strong workforce.

The cuts will be made in managerial, professional and administrative roles, despite first quarter profits being a reported £21m.

The company has stated that the cuts are part of the company’s ongoing transformation – which has already seen it commit £170m toward improving its manufacturing operations during its first three years. British Steel was saved from collapse two years ago when investment firm Greybull bought the business for £1 from Tata Steel.

British Steel is also taking further steps to secure a sustainable future, including continuing to improve manufacturing performance and increasing turnover through strong sales.

“We have made a strong start to life as British Steel but our external environment is constantly changing,” said Gerald Reichmann, British Steel’s chief financial officer. “It is unfortunate we need to go through the proposed redundancy process but by focusing on profitable, niche products I am confident we will create a long-term future for our business and the communities in which we operate.”

British Steel has made it clear that no site closures are being considered as part of the streamlining process. The company has also said that it remains committed to making significant investments in its core products – rail, wire rod, construction and special profiles – along with its iron and steel-making operations.

“It is important our business continues to evolve,” said Roland Junck, British Steel’s executive chairman. “We have already committed £120m to capital expenditure projects and are pressing ahead with the £50m upgrade to our Scunthorpe Rod Mill. However, the pace of change we need in this challenging industry requires further and continued investment along with more agile and efficient operations. To help us achieve this, we have to make difficult decisions.”

Mr Reichmann concluded: “Strong market conditions support the approach we are taking – we have a robust order book and continue to secure significant contracts with customers, old and new, around the world.”

News: British Steel plans to shed 400 jobs 'a body blow' to workforce

Seadrill emerges from depths of bankruptcy

BY Fraser Tennant

Following a year-long Chapter 11 bankruptcy process, offshore drilling rig contractor Seadrill Limited has completed its reorganisation, restructured its debt, sourced substantial liquidity and emerged from the depths in a strong position to execute its business plan.

Seadrill’s plan of reorganisation has equitised approximately $2.4bn in unsecured bond obligations, more than $1bn in contingent newbuild obligations, substantial unliquidated guaranty obligations, and $250m in unsecured interest rate and currency swap claims.

The company will also have access to over $1bn in fresh capital due to extending near-term debt maturities. In addition, a newly constituted board of directors has been appointed, consisting of John Fredriksen as chairman and Harald Thorstein, Kjell-Erik Østdahl, Scott D. Vogel, Peter J. Sharpe, Eugene I. Davis, and Birgitte Ringstad Vartdal as directors.

Once recognised as the world’s largest offshore driller, the company was forced to seek protection from creditors when it was unable to repay the massive debts it amassed during the boom years of buying new rigs.

“I would like to thank our customers, vendors and financial stakeholders for their continued loyalty and support throughout the restructuring process,” said Anton Dibowitz, chief executive of Seadrill Management. “I would also like to thank all our employees for their continued hard work and dedication during this period and whose efforts were a key part of concluding this restructuring process."

Furthermore, in accordance with its new reporting obligations, Seadrill has stated that it will issue its next earnings report in November 2018, which will include half year and third quarter 2018 results and reflect fresh start reporting.

During the course of the restructuring process, Seadrill was principally advised by Kirkland & Ellis LLP, Slaughter and May, Advokatfirmaet Thommessen AS, Jackson Walker LLP, Houlihan Lokey Capital, Inc, Morgan Stanley and Alvarez & Marsal North America, LLP.

Mr Fredriksen concluded: "We are pleased to be emerging from Chapter 11 and moving forward with a solid financial foundation on which we will continue to grow and strengthen our business." 

News:  Seadrill Reorganises, Emerges From Bankruptcy

Breitburn completes Chapter 11 to emerge as Maverick

BY Fraser Tennant

Following a near two-year bankruptcy, struggling energy company Breitburn Energy Partners LP has  emerged from Chapter 11 reorganisation and begun operations as Maverick Natural Resources, LLC – a newly-formed company owned and operated by private equity (PE) firm EIG Global Energy Partners.

Despite being a major acquirer, explorer and developer of oil and gas properties in the US, Breitburn was among the dozens of energy companies that filed for bankruptcy in 2016 after a lingering slump in commodity prices that began in late 2014. Now having successfully completed Chapter 11 reorganisation, Breitburn has returned as a new EIG-backed company, Maverick.

As a result of the Chapter 11 restructuring process, Maverick has an approximate debt of $105m, substantially lower than Breitburn’s $2.96bn debt balance prior to initiating the restructuring process. Furthermore, Maverick has approximately $295m of additional borrowing capacity under a new bank credit facility, and its balance sheet provides it with significant financial flexibility and positions the organisation for long-term success.

Specialising in private investments in energy and energy-related infrastructure on a global basis, EIG has been one of the leading providers of institutional capital to the global energy industry since 1982.

“We are pleased to close this chapter and focus on generating value for the Maverick platform,” said Clayton Taylor, managing director of EIG. “Maverick will emerge with low leverage, a simple balance sheet and sufficient liquidity to remain adaptive to the ever-changing market conditions. Following a judicious review of the asset portfolio and cost structure, we believe Maverick is well-positioned to capitalise on cost reduction initiatives, to deploy capital to high growth prospects and to potentially build the platform through strategic acquisitions.”

A portfolio company majority-owned and controlled by funds and accounts managed by EIG, Maverick is focused on the development and production of long-lived oil and gas reserves throughout the US.

“The Chapter 11 reorganisation marks a new beginning for our company and all of our stakeholders and the end of a difficult period managing through the steep and sustained decline in oil and natural gas prices,” said Halbert S. Washburn, Maverick’s chief executive. “Throughout the extended restructuring process, we remained focused on our key goals of managing production and reducing costs to preserve the value of our diverse and long-lived portfolio, substantially reducing debt and dramatically improving our liquidity position, and achieving a consensual plan of reorganisation among our key creditor groups.”

News: Breitburn Energy Partners Successfully Completes Chapter 11 Reorganization Emerges As Newly Formed Maverick Natural Resources LLC

Power generator FirstEnergy Solutions files for Chapter 11

BY Fraser Tennant

In a move designed to improve the viability of its operations and restructure more than $1bn of debt, power generator FirstEnergy Solutions (FES) has filed for voluntary petitions under Chapter 11 of the Federal Bankruptcy Code.

The filing by FES with the US Bankruptcy Court in the Northern District of Ohio also includes FirstEnergy Nuclear Operating Company (FENOC) which, like FES, is a subsidiary of parent company FirstEnergy Corp. However, FirstEnergy Corp. and its other subsidiaries are not part of the Chapter 11 process.

"The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment,” said Charles E. Jones, president and chief executive of FirstEnergy Corp. “We will remain focused on creating long-term value for customers, employees and shareholders."

Collectively, Chapter 11 filers FES and FENOC own and operate two coal-fired plants, one dual fuel gas/oil plant, one pet-coke fired plant and three nuclear power plants in the competitive, or non-regulated, power-generation industry. Furthermore, FES and FENOC believe that the $550m-plus they have is sufficient liquidity to continue normal operations and meet post-petition obligations to employees, suppliers and customers.

In addition, FES has stated that it will continue seeking legislative and regulatory relief at the state and federal level. The relief is being sought under Section 202(c) of the Federal Power Act, which gives the secretary extraordinary powers to address emergencies.

"Given the prospective timing of federal and state review and our ongoing cash needs and debt service obligations, the FES and FENOC boards of directors determined that the Chapter 11 filing represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief,” said Donald R. Schneider, President of FES.

Serving as legal counsel to FES and FENOC is Akin Gump Strauss Hauer & Feld LLP. Lazard Freres & Co. is serving as investment banker and Alvarez & Marsal North America, LLC is serving as restructuring adviser. Chief restructuring officer for both entities is Charles Moore.  

Mr Schneider concluded: “We believe that the decision to facilitate an orderly financial restructuring under Chapter 11 will best serve our customers, employees and business partners."

News: Coal Generator That Trump Tried to Save Files for Bankruptcy