McClatchy files for Chapter 11 bankruptcy

BY Richard Summerfield

McClatchy, the major US newspaper chain which owns 30 publications across the country, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York.

The company has obtained new $50m debtor-in-possession (DIP) financing from Encina Business Credit, which will allow it and its newsrooms to continue to operate as normal throughout the Chapter 11 process. McClatchy, which plans to emerge from the Chapter 11 process in the coming months, is the second largest publisher of local newspapers in US, behind Gannett.

In a court filing, McClatchy listed the Pension Benefit Guaranty Corporation (PBGC) as its largest unsecured creditor, with a claim of $530m.

“McClatchy’s Plan provides a resolution to legacy debt and pension obligations while maximising outcomes for customers and other stakeholders,” said Craig Forman, president and chief executive of McClatchy. “When local media suffers in the face of industry challenges, communities suffer: polarisation grows, civic connections fray and borrowing costs rise for local governments. We are moving with speed and focus to benefit all our stakeholders and our communities.”

“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,” said Kevin McClatchy, chairman of McClatchy. “This restructuring is a necessary and positive step forward for the business, and the entire Board of Directors has made great efforts to ensure the company is able to operate as usual throughout this process. We are privileged to serve the 30 communities across the country that together make McClatchy and are ever grateful to all of our stakeholders – subscribers, readers, advertisers, vendors, investors, and employees – who have enabled our legacy to date. We look forward to the continued success of such an outstanding group of colleagues long into the future.”

The company reported a net loss of $364m in the first nine months of 2019, up from a loss of $52m in the year-earlier period. Revenue in the first three quarters of 2019 fell by 11 percent, or nearly $68m, with a decline in revenue from both advertisers and readers.

News: Newspaper chain McClatchy files Chapter 11 bankruptcy after pension woes, print declines

Digitalisation dangers

BY Richard Summerfield

A new report suggests that attacks on smart supply chains, medical equipment and the exploitation of real-time operating systems (RTOS) will be the key issues facing companies this year.

‘Cybersecurity Trends for 2020’, the seventh annual report by testing, inspection and certification services provider TÜV Rheinland, is a collaboration between cyber security experts globally, and examines cyber security challenges companies will face in 2020.

Technological developments and changing consumer trends are changing the paradigm for many companies. For example, as the number of smart devices in private households increase, so too do the opportunities for cyber criminals to attack. And as the report notes: “Uncontrolled access to personal data undermines confidence in the digital society. The logistics industry and private vehicles are increasingly being targeted by hackers.”

“From our point of view, it is particularly serious that cybercrime is increasingly affecting our personal security and the stability of society as a whole,” explains Petr Láhner, business executive vice president for the business stream industry service and cyber security at TÜV Rheinland. “One of the reasons for this is that digital systems are finding their way into more and more areas of our daily lives. Digitalisation offers many advantages - but it is important that these systems and thus the people are safe from attacks.”

The report identifies seven top cyber security trends which companies must aware of in 2020 – (i) companies having uncontrolled access to personal data carries the risk of destabilising the digital society; (ii) smart consumer devices are spreading faster than they can be secured, (iii) the trend toward owning a medical device increases the risk of an internet health crisis; (iv) vehicles and transport infrastructure are new targets for cyber attacks; (v) hackers target smart supply chains; (vi) threats to shipping are no longer just a theoretical threat but a reality; and (vii) vulnerabilities in real-time operating systems could herald the end of the patch age.

Report: Cybersecurity Trends for 2020

FNF to acquire F&G in $2.7bn insurance deal

BY Fraser Tennant

In a transaction valued at $2.7bn, the US’s largest provider of commercial and residential mortgage and diversified services, Fidelity National Finance (FNF) Inc, is to acquire FGL Holdings (F&G), a leading provider of fixed indexed annuities and life insurance.

Under the terms of the merger agreement, holders of F&G's ordinary shares (other than FNF and its subsidiaries) may elect to receive either $12.50 per share in cash or 0.2558 of a share of FNF common stock for each ordinary share of F&G they own. Upon closing of the transaction, F&G shareholders will own approximately 7 percent of the outstanding shares of FNF common stock.

The acquisition of F&G offers FNF entry to an industry that it expects will perform well in economic environments which are challenging for title insurance. “We are excited to announce our plans to acquire F&G Holdings and look forward to welcoming F&G employees and policyholders to the FNF family,” said William P. Foley, II, chairman of FNF. “The board and management diligently reviewed FNF's capital allocation strategy and determined that expanding into the annuity market through the acquisition of F&G Holdings would offer compelling benefit to our shareholders.”

Following the close of the transaction, which has been approved by a special committee of F&G directors, a special committee of FNF directors and the FNF board of directors, F&G will operate as a subsidiary of FNF. “We are pleased to join forces with FNF, a world-class company we know well and respect,” said Chris Blunt, president and chief executive of F&G. “This agreement, which offers immediate value to F&G shareholders and compelling benefits to our stakeholders, will provide a meaningful platform for our business as we continue to build the F&G of the future.”

The transaction is expected to close in the second or third quarter of 2020, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearances and approval by F&G shareholders.

Mr Blunt concluded: “We are excited to enter into the next phase of growth with FNF and are confident that by combining our complementary businesses, we will be better positioned to carry out our mission of helping customers turn their aspirations into reality.”

News: U.S. insurer Fidelity National to buy FGL Holdings in $2.7 billion deal

PG&E files updated Chapter 11 plan

BY Fraser Tennant

In a move that will allow it to exit bankruptcy as a “reimagined utility” and pay more than $25bn to wildfire victims, PG&E Corporation, the parent company of Pacific Gas and Electric Company, has filed an updated Chapter 11 plan of reorganisation.

According to the filing, PG&E is on track to have its plan confirmed by 30 June 2020, the deadline for participating in California’s new go-forward wildfire fund, a settlement for several wildfires in Northern California which killed dozens of people in 2017.

Upon emergence from Chapter 11, PG&E is expected to be a financially stable company positioned to continue prioritising safe operations and customer focus, while meeting California's energy needs and clean energy goals in a changed climate.

The key updated elements of the plan include: (i) regionalising the company's operations and its infrastructure to enhance the company’s focus on local communities and customers; (ii) further strengthening PG&E’s corporate governance by appointing an independent safety adviser: (iii) establishing a newly expanded role of chief risk officer (CRO) who will report directly to the PG&E chief executive and have oversight of risks associated with PG&E’s operations; (iv) paying value in excess of $25bn to wildfire victims through the settlements reached with individual victims, subrogation claimants and public entities; and (v) emerging with a financing structure that protects customer rates and positions the company for long-term success.

"Under our Plan, the company will emerge from Chapter 11 as a reimagined utility with an enhanced safety structure, improved operations, and a board and management team focused on providing the safe, reliable, and clean energy our customers expect and deserve,” said Bill Johnson, chief executive and president of PG&E Corporation. “Our 23,000 PG&E employees are striving every day to deliver that service and to build the utility of the future.”

Headquartered in San Francisco, Pacific Gas and Electric Company serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California.

Mr Johnson concluded: “We are committed to emerge from Chapter 11 in a manner that allows us to help lead California toward the future, meeting the highest safety, governance and operational standards.”

News: Utility PG&E Files Restructured Chapter 11 Plan

Worldline and Ingenico agree $8.7bn merger

BY Richard Summerfield

France’s two biggest payments companies are to merge after Worldline agreed to acquire rival Ingenico for $8.7bn.

The deal will see Ingenico shareholders receive 11 Worldline shares and €160.50 in cash for every seven Ingenico shares held—a 24 percent premium on Ingenico’s average share price over the last month. Pending regulatory and shareholder approvals, the deal is expected to close in Q3 2020. Under the terms of the deal, Gilles Grapinet, chairman and chief executive of Worldline, will lead the combined company.

“I am proud to announce that today is a great day for Worldline and for Ingenico, and more widely for our payment industry: together we create the European world-class leader in digital payments,” said Mr Grapinet. “We deeply respect Ingenico and its team for the deep business repositioning of their company realised over the last years into one of the largest European payment service providers with outstanding global positions in online payments and merchant acquiring. We have been impressed by the strong improvement in performance realised over the last 18 months under the leadership of Nicolas Huss, as well as by the in-depth transformation initiated at the same time of their global leading payment terminal business, resulting in increased efficiency, more autonomy and a new strategic roadmap.”

“The combination of Worldline and Ingenico offers a unique opportunity to create the undisputed European champion in payments on par with the largest international players,” said Bernard Bourigeaud, chairman of Ingenico. “This transaction comes at the time of accelerating consolidation of the industry and I am convinced that the joined forces of both leaders will deeply transform the industry. I am very pleased to write a new page in the European payment landscape and build the foundation of a strong and breakthrough payment player. This transaction is unanimously supported by Worldline and Ingenico’s board of directors and I would be very proud to become the non-executive chairman of the board of directors at closing to pursue this exceptional success story.”

The combined company will have 20,000 employees across 50 countries with 1 million merchant and 1200 financial institution customers. Worldline said it expects combined proforma 2019 net revenues of €5.3bn out of the deal.

News: Worldline's $8.7 billion Ingenico deal to create European payments leader