Superior Energy Services files for Chapter 11

BY Fraser Tennant

In a move to unburden itself of more than $1bn in debt, oilfield services company Superior Energy Services has filed for Chapter 11 bankruptcy protection in order to implement a proposed pre-packaged restructuring plan.

The filing is the latest in a series of bankruptcies to have hit the energy industry in recent months, including those of Seadrill Partners and Noble Corporation. In 2020 to date, 54 oilfield services companies have filed for bankruptcy.

Superior Energy’s restructuring plan eliminates all of its funded debt and related interest costs, as well as establishing a capital structure that the company believes will improve its operational flexibility and long-term financial health, even in a low-commodity-price environment.

“Since the initial announcement of our planned recapitalisation initiative, we have been encouraged by the growing consensus of the noteholders that have agreed to support the plan, as well as the ongoing strong backing and support provided by our customers and lenders,” said David Dunlap, president and chief executive of Superior Energy. “We look forward to quickly emerging from the Chapter 11 in early 2021.”

The company also intends to operate its businesses and facilities without disruption to its customers, vendors and employees, and is filing motions with the Bankruptcy Court to ensure that all undisputed trade claims against it – whether arising prior to or after the commencement of Chapter 11 proceedings – will be paid in full in the ordinary course of business.

Founded in 1991, Houston-based Superior Energy serves the drilling, completion and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialised oilfield services and equipment that are used throughout the economic lifecycle of oil and gas wells.

Mr Dunlap concluded: “We thank all of our employees for their ongoing hard work and commitment to our company and our customers and are grateful to our vendors and other valuable business partners for their continued support.”

News: Superior Energy Services files Chapter 11 bankruptcy to restructure

The trillion-dollar question

BY Richard Summerfield

Global losses from cyber crime have increased by over 50 percent since 2018 and now total over $1 trillion per year, according to McAfee’s new global report, ‘The Hidden Costs of Cybercrime’.

The report, produced in partnership with the Center for Strategic and International Studies (CSIS), focuses on the significant financial and unseen impacts of cyber crime worldwide. The study is based on data collected by Vanson Bourne, which interviewed a screened, representative sample of 1500 cross-sector IT and line of business decision makers between April and June 2020, alongside CSIS interviews with government officials, open source material, and IMF income data.

According to the report, in 2019, two-thirds of organisations reported some kind of cyber security incident, while the average cost of an incident to an individual company has now topped $500,000.

“The severity and frequency of cyberattacks on businesses continues to rise as techniques evolve, new technologies broaden the threat surface, and the nature of work expands into home and remote environments,” said Steve Grobman, senior vice president and chief technology officer at McAfee.

“While industry and government are aware of the financial and national security implications of cyberattacks, unplanned downtime, the cost of investigating breaches and disruption to productivity represent less appreciated high impact costs. We need a greater understanding of the comprehensive impact of cyber risk and effective plans in place to respond and prevent cyber incidents given the hundreds of billions of dollars of global financial impact,” he added.

There are many factors at play in the growing cost of cyber crime for businesses today. While cyber criminals are better, more accurate and more sophisticated, there is also better and more accurate incident reporting done by organisations.

2020, has, of course, presented its own challenges. With significant increase in remote working brought about by the COVID-19 pandemic, there has also been a commensurate increase in ransomware attacks and phishing-related incidents.

Worryingly, the report noted that 56 percent of the organisations surveyed did not have a plan to both prevent and respond to a cyber security incident. Of those that did, only 32 percent believed it was effective.

Report: The Hidden Costs of Cybercrime

Salesforce to acquire Slack for $27.7bn

BY Richard Summerfield

Salesforce has agreed to acquire Slack Technologies in a deal worth $27.7bn. Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share held. That is $45.50 per share, based on Salesforce’s closing price on Tuesday - a premium of 54 percent since news of negotiations between the companies emerged last week.

The board of directors of both companies have approved the deal and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement. The transaction is expected to close in the second quarter of Salesforce’s fiscal year 2022, subject to approval by Slack stockholders, the receipt of required regulatory approvals and other customary closing conditions.

“This is a match made in heaven,” said Marc Benioff, co-founder and chief executive of Salesforce. “Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world.”

“As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility,” said Stewart Butterfield, chief executive of Slack. “Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

Slack has seen a near-doubling of its market value in 2020 as the COVID-19 pandemic has seen offices close and remote working come to the fore. However, at the start of the year, Slack had lost around 40 percent of its value since it went public. Equally, according to its most recent earnings report, the company lost 16 percent of its value. Slack also recorded net losses of $147.6m during two quarters of 2020.

The deal is expected to help Salesforce tackle the market dominance of Microsoft, which has seen a significant surge in the number of people utilising its business applications during the coronavirus crisis.

News: Salesforce acquires Slack for over $27 billion, marking cloud software vendor’s largest deal ever

VC and PE investment in Canada declined 63 percent in Q3, claims new report

BY Fraser Tennant

Canadian venture capital (VC) and private equity (PE) investment declined dramatically in the third quarter of 2020, according to a report published this week by the Canadian Venture Capital & Private Equity Association (CVCA).

In its ‘Venture Capital Canadian Market Overview: Q3 2020’, the CVCA reveals that $1.4bn was invested in over 155 deals in Q3 2020, 27 percent lower than Q3 2019 ($1.9bn across 177 deals). Furthermore, year-to-date (YTD) activity is tracking 25 percent below the four-year average across 2015-2019 in both dollars invested and deals ($21bn across 565 deals).

The largest deal seen in Q3 was the $354m growth investment in Toronto-based Superior Plus by Brookfield Asset Management.

However, a decrease in mega-deals served to drive the average deal size down. In Q3 2020 there were only three mega-deals ($50m plus) that closed, compared to eight in the previous quarter. As a result, the average deal size in Q3 2020 was only $7m, bringing down the YTD average deal size to $8.5m, in contrast to 2019, when the average deal size was $11m. 

“The strength of Q2 was in many ways a combination of GPs further capitalising their portfolio and the added capital injections of Business Development Bank of Canada (BDC) and Export Development Canada (EDC) matching programmes,” said Kim Furlong, chief executive of the CVCA. “Q3, however, is more aligned with the challenges the pandemic has created for deal flow. While our members are finding ways to deploy capital, the realities of COVID-19 and the continued strength of valuations is apparent in the deal flow.”

In terms of later stage deals, these represented 45 percent of the total investment in the third quarter with $1.6bn invested over 57 deals, while 42 percent ($1.5bn over 189 deals) went to early stage and 8 percent ($298m over 154 deals) went to seed stage companies.

Additionally, the CVCA notes that there were 15 PE-backed exits in the third quarter, a significant increase from the 11 exits in the entire first half of 2020. The pace of VC-backed exits is on track relative to previous years, with 26 exits completed YTD.

Ms Furlong concluded: “Despite the uncertainty due to the COVID-19 pandemic, Canadian PE firms are adapting to the evolving conditions. “Given Canadian PE’s long-term investment horizon, PE fund managers are well-positioned to help our businesses on a path to economic recovery.”

Report: Venture Capital Canadian Market Overview: Q3 2020

AvePoint goes public via $2bn SPAC deal

BY Fraser Tennant

In a $2bn deal that takes it from private to public ownership, global Microsoft strategic cloud partner AvePoint is to merge with publicly traded special purpose acquisition company (SPAC) Apex Technology.

The combined company will benefit from $140m in proceeds from a group of institutional investors participating in the transaction through a committed private investment (PIPE).

Furthermore, Sixth Street, the global investment firm which led a $200m growth equity investment in AvePoint in 2019, will continue as a shareholder in the combined company, which will be led by AvePoint’s co-founder and chief executive Dr Tianyi Jiang, with AvePoint co-founder Kai Gong serving as executive chairman.

Upon completion of the proposed transaction, existing AvePoint shareholders are expected to own approximately 72 percent of the combined company, which is expected to have approximately $252m in cash on the balance sheet.

Headquartered in Jersey City, New Jersey, AvePoint has grown to serve the largest software-as-a-service (SaaS) userbase in the Microsoft 365 ecosystem, with more than 7 million cloud users and an estimated market of $33bn by 2022 according to the International Data Corporation (IDC).

“AvePoint provides critical data management solutions that enable organisations to make their digital collaboration systems more productive, secure and compliant,” said Dr Jiang. “The impact of coronavirus (COVID-19) and the growth of Microsoft’s cloud solutions, including Microsoft 365 and Microsoft Teams, have accelerated demand for our products.

“And we were growing prior to COVID-19 as well,” he continued. “We have achieved eight quarters of impressive growth. We have positive free cash flow and are in line with the key ‘Rule of 40’ SaaS industry growth metric. Going public now gives us the ability to meet this demand and scale up faster across product innovation, channel marketing, international markets and customer success initiatives.”

The merger has been approved by the board of directors of Apex, as well as the board of directors of AvePoint, and is subject to the satisfaction of customary closing conditions, including the approval of the shareholders of Apex and AvePoint and the receipt of any required regulatory approvals.

Gavriella Schuster, corporate vice president at Microsoft, said: “AvePoint’s merger to become a public company demonstrates the power of Microsoft’s channel and the opportunity it provides our partners to flourish long-term.”

News: Sixth Street-backed AvePoint to go public via $2 billion merger