Toys R Us to close 26 UK stores putting 800 jobs at risk

BY Fraser Tennant

In another blow for the beleaguered toy retailer giant, Toys R Us has announced that it is to close 26 stores in the UK as part of a process to transform the business and make it fit to meet the evolving needs of customers in today’s UK retail market.

Under the UK Company Voluntary Arrangement (CVA) process, the toy chain has submitted a comprehensive operational and financial restructuring plan to its creditors and will solicit their approval of this plan over the coming weeks. 

If approved, the CVA would substantially reduce the UK company’s rental obligations and allow the company to move to a new, viable business model. The store closures, which may put more than 800 jobs at risk, are expected to commence in Spring 2018.

The toy retailer giant currently employs 3200 people in the UK.

The CVA process will not impact any Toys R Us entities or stakeholders outside the UK, including employees, vendors and customers. The company's approximately 1600 stores around the world, including all stores in the UK, are currently open for business and continuing to operate as usual.

“All of our stores across the UK remain open for business as normal through Christmas and well into the New Year,” said Steve Knights, managing director of Toys R Us UK. “Customers can also continue to shop online and there will be no changes to our returns policies or gift cards across this period.”

During 2018, the plan is for Toys R Us to make changes to the store estate as it moves to a new business model for future growth and profitability.

Mr Knights continued: “Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales. But the warehouse style stores we opened in the 1980s and 1990s, while successful in the early days, are too big and expensive to run in the current retail environment.”

As a result of a heavy debt load and a consumer switch toward online shopping, in September 2017, Toys R Us voluntarily filed for Chapter 11 bankruptcy protection in the US and Canada.

Dave Brandon, chairman and chief executive of Toys R Us, concluded: “As we continued to work through the financial restructuring process, we hope to receive authorisation to restructure our UK lease obligations so that we will be better able to invest in our UK business.”

News: Toys R Us to shut 'at least' 26 UK stores

Armstrong Energy files for Chapter 11 reorganisation

BY Richard Summerfield

In yet another blow for a depressed industry, coal mining company Armstrong Energy, Inc. has announced that it, and substantially all of its wholly owned subsidiaries, has filed for reorganisation under Chapter 11 of the US Bankruptcy Code.

The collapse of Armstrong is the first such bankruptcy since president Donald Trump vowed to end the so-called ‘war on coal’, though it is one of many companies to have opted for bankruptcy in light of the emergence of cheap natural gas in the US in recent years.

Armstrong Energy has taken the Chapter 11 route (in the Bankruptcy Court for the Eastern District of Missouri) in order to consummate the transfer of substantially all of its assets to a new entity to be jointly owned by Knight Hawk Holdings, LLC and Armstrong’s secured noteholders. Once the proposed assets have been transferred, Knight Hawk will take control of Armstrong Energy’s ongoing operations.

A producer of low-chlorine, high-sulfur thermal coal from the Illinois Basin, Armstrong Energy operates both surface and underground mines. As of 30 June 2017, the company controlled over 445 million tons of proven and probable coal reserves in Western Kentucky and currently operates five mines. Armstrong also owns and operates three coal processing plants and river dock coal handling and rail loadout facilities, which support its mining operations.

"We remain firmly committed to serving our customers and to being a good employer by maintaining safe, productive operations as we undertake this process," said J. Hord Armstrong, III, executive chairman of Armstrong Energy. "We are confident that this court-supervised process is the best way forward.”

Citing “recurring losses from operations”, the beleaguered company had initially stated in an August filing with the US Securities and Exchange Commission (SEC) that it foresaw a need to reorganise under the protection of a federal bankruptcy court.

Armstrong Energy has filed various motions with the Missouri Bankruptcy Court, including requesting authorisation to continue paying employee wages and providing healthcare and other benefits. The company has also asked for authority to continue existing customer programmes and intends to pay suppliers in full under normal terms for goods and services provided after the filing date of 1 November 2017.

Kirkland & Ellis LLP is serving as legal adviser, MAEVA Group LLC is serving as financial adviser and FTI Consulting, Inc. (FTI) is providing interim management services to Armstrong Energy in connection with the Chapter 11 process.

Armstrong Energy expects its mining operations and customer shipments to continue in the ordinary course throughout the Chapter 11 process.

News: Coal-Mining Armstrong Energy Files for Bankruptcy Protection

Toys ‘R’Us files for Chapter 11 as heavy debt and online shopping switch take their toll

BY Fraser Tennant

As a result of a heavy debt load and a consumer switch toward online shopping, toy retailer giant Toys ‘R’Us has voluntarily filed for Chapter 11 bankruptcy protection in the US and Canada.

In addition to the filing in the US Bankruptcy Court for the Eastern District of Virginia in Richmond, VA, the company’s Canadian subsidiary intends to seek protection in parallel proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.

Toys ‘R’ Us intends to use the court-supervised proceedings to restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth.

The company’s operations outside the US and Canada, including its approximately 255 licensed stores and joint venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing and Companies’ Creditors Arrangement Act (CCAA) proceedings.

The vast majority of the approximately 1600 Toys ‘R’Us and Babies ‘R’Us stores around the world – which are mostly profitable – continue to operate as usual.

“Today marks the dawn of a new era at Toys ‘R’Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Dave Brandon, chairman and chief executive of Toys ‘R’ Us. “Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5bn of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide.”

Furthermore, the company has received a commitment for over $3bn in debtor-in-possession (DIP) financing from various lenders, including a JPMorgan-led bank syndicate and certain existing lenders, which, subject to court approval, is expected to immediately improve the financial health of Toys ‘R’ Us and support its ongoing operations during the court-supervised process.

Serving as principal legal counsel to Toys ‘R’ Us is Kirkland & Ellis LLP, while Alvarez & Marsal is serving as restructuring adviser and Lazard is serving as financial adviser.

Mr Brandon concluded: “We are confident that these are the right steps to ensure that the iconic Toys’R’Us and Babies ‘R’Us brands live on for many generations.”

News: Toys 'R' Us files for bankruptcy protection in US

Sempra and Oncor agree merger

BY Richard Summerfield

Sempra Energy is to acquire Oncor Electric Delivery Co for $18.8bn, including existing, outstanding debt of around $9.45bn, the companies have announced in a statement.

Sempra will pay cash for the company and the deal is expected to be financed by a combination of Sempra's own debt and equity, third-party equity and $3bn of expected investment-grade debt.

"Both Sempra Energy and Oncor share more than 100 years of experience operating utilities that deliver safe, reliable energy to millions of customers," said Debra L. Reed, chairman, president and CEO of Sempra Energy. "With its strong management team and long, distinguished history as Texas' leading electric provider, Oncor is an excellent strategic fit for our portfolio of utility and energy infrastructure businesses. We believe our agreement with Energy Future will help ensure that Texas utility customers continue to receive the outstanding electric service they have come to expect from Oncor and provide stability to Oncor's nearly 4000 employees."

Elliott Management is the largest creditor of bankrupt Energy Future Holdings, the majority owner of Oncor, and Elliott have backed Sempra’s bid to take over the company, spurning a rival takeover attempt by Warren Buffett. In July, Mr Buffett’s Berkshire Hathaway made a rival $18bn offer for Oncor which was rejected by the company, as well as Elliott, who argued that the offer was too low and not in creditors’ interest. 

Under the terms of the deal, Sempra Energy has committed to support Oncor's plan to invest $7.5bn of capital over a five-year period to expand and reinforce its transmission and distribution network.

Once the deal has been completed, Bob Shapard, Oncor's CEO, will become executive chairman of the Oncor board of directors and Allen Nye, currently Oncor's general counsel, will succeed Mr Shapard as Oncor's CEO. Both are set to serve on the Oncor board, which will consist of 13 directors, including seven independent directors from Texas, two from existing equity holders and two from the new Sempra Energy-led holding company.

Elliott had tried to put together its own $9.3bn bid to buy Oncor but ultimately decided to back the Sempra deal, which a spokesman said "provides substantially greater recoveries to all creditors of Energy Future than the proposed Berkshire transaction." Elliott acquired a specific class of debt worth about $60m from Fidelity Investments that gave it the power to block Berkshire’s offer.

News: Sempra Energy to buy Oncor for $9.45 billion in blow to Berkshire

Source: http://www.reuters.com/article/us-oncor-m-a-sempraenergy-idUSKCN1B1041

Knight Energy files for Chapter 11 as part of restructuring exploration

BY Fraser Tennant

In an attempt to improve its balance sheet and liquidity position, Knight Energy Holdings, LLC and its operating affiliates (including Knight Oil Tools) have voluntarily filed for Chapter 11, as well as entering into a financial restructuring support agreement.

The agreement, made in the US Bankruptcy Court for the Western District of Louisiana, Lafayette Division, is supported by secured lenders and will improve Knight Energy’s balance sheet by equitising over $175m of its existing obligations and provide for significant new capital to substantially boost its liquidity position through an exit financing facility.

Knight Energy has stated that it will continue to operate in the ordinary course of business during the Chapter 11 and restructuring proceedings and has filed various ‘first day’ motions seeking approval of relief – a $14.5m debtor-in-possession (DIP) financing facility – so as to operate with minimal impact or interruption to its valued employees, customers, vendors and other important parties.

One of the largest, privately-owned oilfield rental tool companies in the world, Knight Energy supplies a wide offering of rental equipment and services for drilling, completion and well control activities - serving a diverse base of oil and natural gas exploration & production (E&P) operators. The company was founded in 1972 by Eddy Knight and is owned today by second-generation family members.

“Like many leading oil and gas companies, we have been affected by the ongoing downturn in the market,” said the Knight family in a statement. “The company has spent considerable time since then focusing on how to best serve our customers, employees, and to maintain strong relations with our vendors and employees. In order to best position our company for the future, we felt that a financial restructuring was necessary and worked with our stakeholders to achieve a consensual plan to deleverage the company and position Knight and our employees for success.”

Heller Draper is acting as lead restructuring counsel during the Chapter 11 restructuring proceedings, with a representative from Opportune serving as Knight Energy’s chief restructuring officer. Farlie Turner has served as Knight Energy’s financial adviser.

Confident that requested relief will be granted and the company will have ample liquidity to support the business during the Chapter 11 and restructuring process, the Knight family concluded: “Together we have developed a long term strategic plan that will allow Knight to continue to be a market leader.”

News: Knight Oil Tools’ Parent Company Files For Bankruptcy