Purdue Pharma files for Chapter 11 to settle opioid lawsuits

BY Fraser Tennant

Accused of fuelling the opioid crisis which claimed the lives of almost 70,000 people in the US last year, drug maker Purdue Pharma has filed for Chapter 11 bankruptcy protection in a bid to settle the opioid litigation the company faces.

To finalise and implement the settlement agreement, the court-supervised Chapter 11 process will facilitate a resolution of all claims against Purdue and its subsidiaries, while preserving the value of the company’s assets.

Furthermore, the settlement is estimated to provide more than $10bn to address the opioid crisis, including contributing millions of doses of life-saving opioid overdose reversal medications – treatment that has the potential to reverse overdoses from powerful synthetic opioids, such as fentanyl.

The key elements of the settlement, which is subject to court approval, include: (i) the owners of Purdue contributing all of its assets to a trust or other entity established for the benefit of claimants; (ii) the new entity being governed by a new board selected by claimants and approved by the bankruptcy court; (iii) the new entity potentially contributing tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost; and (iv) the new entity agreeing to be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids.

“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” said Steve Miller, chairman of Purdue’s board of directors. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”

Across the US, more than 130 people die every day after overdosing on opioids. The misuse of and addiction to opioids – which includes prescription pain relievers, heroin and synthetic opioids, such as fentanyl – is a crisis that affects public health, as well as social and economic welfare.

Mr Miller concluded: “We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”

News: Purdue Pharma files for bankruptcy in the US

Dream deal for Blackstone

BY Richard Summerfield

Funds managed by Blackstone Group have agreed to acquire Dream Global Real Estate Investment Trust for $4.7bn.

The deal will see Dream stockholders receive C$16.79 in cash for each share they hold, a premium of 18.5 percent to Friday’s closing stock price. The deal is expected to close by December.

The deal needs at least 66.67 percent approval from Dream Global’s shareholders. Its board of trustees unanimously approved the deal and recommended the shareholders vote in favour of it.

“This transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO,” said Detlef Bierbaum, chairman of Dream Global’s board of trustees. “At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders. Upon completion of the Transaction, Dream Global will have increased its equity market capitalisation by nearly eight times and will have delivered total annualised returns of 15 percent to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60 percent and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period.”

“Today’s announcement can be attributed to Dream Global’s high-quality portfolio of properties located in key markets in Western Europe and the strength of our property management platform, as evidenced by our strong relationships with tenants, partners and lenders,” said Jane Gavan, president and chief executive of Dream Global. “By combining a disciplined approach to capital allocation with active asset management, we have established Dream as one of the most respected brands for investing in Western European office properties.”

“We are delighted to be acquiring Dream Global, a high-quality and diversified portfolio of office and logistics assets in Western Europe, which has been created by Dream over the last eight years,” said James Seppala, head of Blackstone Real Estate Europe. “This transaction is an exciting opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”

Canadian REIT Dream Global, which was formerly known as Dundee International REIT, started out by acquiring properties leased to Deutsche Post, Germany’s post office. Today the firm owns over 200 office and industrial properties in key markets in Western Europe with a particular focus on Germany and the Netherlands.

News: Dream Global REIT to be bought by Blackstone funds in $4.7 billion deal

PG&E files Chapter 11 exit plan

BY Richard Summerfield

Californian energy provider PG&E Corp has filed a reorganisation plan which proposes to cap the wildfire liabilities that forced it into bankruptcy at about $18bn — less than half of what victims and insurers have said they are owed.

The plan, which was filed in US Bankruptcy Court in San Francisco, includes payments capped at $8.4bn for wildfire victims, payments capped at $8.5bn for reimbursing insurers that had paid victims and a $1bn settlement with local governments. The company was forced to file for Chapter 11 bankruptcy in January to deal with an estimated $30bn in liabilities related to devastating wildfires that its equipment ignited in 2017 and 2018. In its filing, the company listed $51.69bn in debts and $71.39bn in assets.

However, the exit plan may prove controversial as lawyers for fire victims said the company’s liabilities may top $40bn. Furthermore, insurance companies claim PG&E owes them approximately $18bn.

“This is outrageous,” said Gerald Singleton, a lawyer representing around 5500 wildfire victims. “PG&E is short changing the wildfire victims and is attempting to evade its responsibility.”

“Under the Plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California's clean energy goals,” said Bill Johnson, PG&E’s chief executive and president. “Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process.”

Prior to the filing of its restructuring plan, the company has fended off a number of potential takeover and equipment offers. Last week, the city of San Francisco is believed to have offered $2.5bn for the company’s electrical equipment. The city’s offer is 35 times PG&E’s estimated 2019 earnings for the assets and described it as “a very attractive premium valuation” considering the company’s bankruptcy and other recent utility takeovers.  However, this offer was rebuffed.

Going forward, PG&E said it would employ a combination of debt and stock to raise the cash to help finance its exit from bankruptcy.

News: PG&E proposes reorganization plan with $17.9 billion for wildfire claims

Prudential acquires personal and financial health platform in $2.35bn deal

BY Fraser Tennant

In a transaction valued at $2.35bn, Prudential Financial is to acquire Assurance IQ – a direct-to-consumer platform that transforms the buying experience for individuals seeking personalised health and financial wellness solutions.

Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019.

A financial wellness leader and premier active global investment manager with more than $1 trillion in assets under management, Prudential has operations in the US, Asia, Europe and Latin America. Its board of directors has unanimously approved the deal to acquire Assurance’s technology-driven, on-demand service platform.

“Assurance was founded to protect and improve the personal and financial health of every individual,” said Michael Rowell, co-founder and chief executive of Assurance. “Prudential’s shared vision, coupled with the strength of its offering and capabilities, make it the ideal partner with which to begin our next chapter. We are excited to create an ecosystem that reaches more people and new markets with a more expansive suite of products to drive our combined growth.”

Launched in 2016, Assurance uses advanced data analytics to match buyers with customised solutions spanning life, health, Medicare and auto insurance, giving them options to purchase entirely online or with the help of a technology-assisted live agent.

Assurance also matches consumers with the live agent or specific sales process that is best suited to their needs, resulting in better customer outcomes that drive higher levels of engagement and conversion.

“Assurance accelerates the strategy and growth potential of Prudential’s financial wellness businesses, bringing us closer to more people across the entire socio-economic spectrum to better serve the full picture of their needs,” said Charles Lowrey, chairman and chief executive of Prudential. “We look forward to working with Mike Rowell and his entire team to grow the Assurance business in the U.S., and, over time, to extend its unique approach to customers around the world.”

In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition of Assurance is expected to generate cost savings of $50m to $100m.

News: Prudential buys Assurance IQ for $2.35 billion in new tech bet

J2 acquires APi in $2.9bn transaction

BY Fraser Tennant

In a $2.9bn deal it describes as an “excellent fit”, investment vehicle J2 Acquisition Limited is to acquire commercial life safety solutions and industrial specialty services provider APi Group, Inc.   

A publicly-listed acquisition company that listed in October 2017, J2’s definitive agreement to acquire APi is its debut transaction.

Operating in over 200 locations across the US, Canada, and the UK, APi is the leading independent life safety services provider and a top-five specialty services contractor.  Once the acquisition is complete, J2 plans to continue to build on APi's operating strengths with a focus on expanding the service portion of the business across its portfolio.

"The J2 team's decades of leadership experience operating large diverse businesses, broad industrial knowledge, and disciplined acquisition strategy – that they have employed successfully at previous companies and ventures – will be instrumental in further growing APi's inherent value and innovative, customer-centric approach over the long-term,” said Russell A. Becker, president and chief executive of APi .

The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions. Following closing, APi's existing management team will remain in place.

"We were immediately impressed by APi's management team, its strong culture and its commitment to leadership development, combined with consistent delivery of margins and cash flow at the high-end of its peer group over the years,” said James E. Lillie, co-founder of J2. “The business operates in resilient and dynamic markets with attractive growth drivers and we believe that, with the current management team, we can drive shareholder value by guiding the business to even better levels of performance and growth.”

Sir Martin E. Franklin, co-founder of J2, concluded: “We believe APi is an excellent foundation for J2's initial investment and is solidly in line with our disciplined investment criteria. We look forward to working with APi and to the strong growth opportunities ahead.”

News: Franklin's J2 blank check company buys APi Group for $2.9 billion

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