One day: Belk exits Chapter 11 – 24 hours after filing

BY Fraser Tennant

One day after filing for Chapter 11 bankruptcy, department store chain Belk has successfully completed its financial restructuring – finalising an expedited pre-packaged reorganisation to emerge well-positioned for long-term growth.

Belk's reorganisation plan received nearly unanimous support from majority owner Sycamore Partners and lenders, including KKR Credit and Blackstone Credit, and provides for suppliers and landlords to be paid in full as normal operations continue at all store locations and on Belk's e-commerce platform.

"We are pleased to have received nearly unanimous support from all of our stakeholders to complete this restructuring in just one day, positioning us to pursue our growth initiatives and move the company forward from a strengthened financial foundation," said Lisa Harper, chief executive of Belk. "We are immensely grateful for our loyal customers, dedicated associates, and supportive vendor partners who enabled us to complete this restructuring efficiently, without delay or disruption.”

As a result of the Chapter 11 restructuring, Belk has received $225m of new capital, significantly reduced its debt by approximately $450m and extended maturities on all term loans to July 2025. The infusion of cash and reduction in debt provides Belk with increased liquidity to focus on its key initiatives for growth, including further enhancements to its omnichannel capabilities and the expansion of merchandise offerings into new, relevant product categories.

"I want to congratulate the team at Belk for its impressive transformation from a traditional department store business into a full omni retailer," adds Stefan Kaluzny, managing director of Sycamore Partners. "The company has tripled its web business and currently fulfils over 70 percent of its web orders from its stores, providing a nimble and scalable platform for expansion. It has been a remarkable undertaking in a very challenging macro environment."

Privately-owned, Charlotte-based Belk opened its first store in 1888 and currently serves customers at nearly 300 stores in 16 south-eastern states.

Ms Harper concluded: “Belk has a bright future ahead, and I am looking forward to growing our more than 130-year legacy as a trusted retailer for many years to come.”

News: Belk OK'd to exit bankruptcy less than 24 hours after it filed

UK recruitment activity will rise as unemployment peaks, says new survey

BY Fraser Tennant

Recruitment activity in the UK will rise in the first quarter of 2021 as unemployment plateaus, according to a new report by the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group. 

The ‘CIPD/Adecco Labour Market Outlook’ report, based on a survey of 2000 UK employers, reveals that over half (56 percent) indicated they are looking to recruit in Q1 2021, up from 53 percent in the previous quarter and 49 percent six months ago. This is down from 66 percent during Q1 2020. 

In terms of sectors, healthcare, finance and insurance, education, and information and communications have indicated strong hiring intentions. Other sectors however, such as hospitality, which continues to  be affected by social distancing measures, are less optimistic. 

In the private sector, companies have signalled a willingness to maintain their workforce, with the number of employers stating that they are planning redundancies dropping from 34 to 20 percent.

“These are the first signs of positive employment prospects that we have seen in a year,” said Gerwyn Davies, senior labour market adviser at the CIPD. “Our findings suggest that unemployment may be close to peak and may even undershoot official forecasts. However, it is far too soon to rule out further significant private sector redundancies later in the year if the government does not extend the furlough scheme or if the economy suffers any additional unexpected shocks.”

To this end, the report urges the UK government to extend the coronavirus (COVID-19) job retention scheme until at least the end of June to help support sectors most affected by the restrictions.

“The start of 2021 has been challenging, with the UK entering into its third lockdown,” said Alex Fleming, region president of Northern Europe at Adecco Workforce Solutions. “It is still positive to see some signs of labour market recovery, with a clear rise in net employment intentions. The furlough scheme and redeployment have enabled many organisations to avoid redundancies during the pandemic.”

The report also notes that investing in reskilling and upskilling will be important tactic in future-proofing the workforce – a key factor in helping to minimise any jobs fallout.

Mr Fleming concluded: “Companies that invest in career development, enhancing the skillsets of employees and maintaining a positive workplace culture will help to strengthen their talent attraction and retention strategies during what remains such an unprecedented time.” 

Report: CIPD/Adecco Labour Market Outlook

Record year for UK’s cyber security sector

BY Richard Summerfield

2020 was a landmark year for cyber security investment in the UK, according to a new government report from the Department for Digital, Culture, Media and Sport (DCMS).

As the UK workforce became largely remote over the last year due to COVID-19, there were record levels of investment in the cyber security sector. The report notes that more than £800m was invested in the sector in 2020, while the number of active cyber security firms in the UK increased 21 percent with almost 50,000 people now employed in UK cyber security.

The report, which tracked the UK’s cyber security industry across a range of indicators between April 2019 and December 2020, also highlighted a nine percent rise in employment in the industry, with more than 3800 new full-time jobs created, bringing the total number of people working in the sector to 46,683.

“The need for cutting-edge cybersecurity has never been greater and this resilient sector is growing, diversifying and solidifying its status as a jewel in the UK’s tech crown,” said digital minister Matt Warman, speaking at the CyberASAP online event. “With more than 3,800 new jobs created, firms – large and small – are doing vital work keeping people and businesses secure online so we can build back safer from the pandemic. I am committed to supporting the industry to reach new heights, create more jobs and lead new innovations in this field.”

The report also found that the sector’s total annual revenue continued to rise, by 7 percent, reaching £8.9bn within the most recent financial year. The sector also contributed more than £4bn to the economy – up 6 percent in the last year, with mainly mature firms driving growth.

The 2020 edition of the report also suggested that more than half of firms (54 percent) are now based outside of London and the South East, with cyber security clusters prospering across the country in areas such as Scotland, Northern Ireland and North West England.

Given the gravity of the situation over the last 12 months, it is, perhaps, unsurprising that the cyber security sector has seen such considerable growth. Businesses have seen a marked expansion in the number and type of cyber threats they have had to confront. Ransomware attacks against UK organisations surged during 2020, for example, while phishing attacks also exploded in volume as hackers sought to take advantage of more employees working from home.

Report: Cyber Security Sectoral Analysis 2021

Nestlé to divest water unit for $4.3bn

BY Richard Summerfield

Nestlé S.A. has agreed to sell its Nestlé Waters North America (NWNA) unit to One Rock Capital Partners and Metropoulos & Co. in a deal worth $4.3bn.

In June 2020, Nestlé announced it was conducting a strategic review of the unit, as it planned to sharpen the focus of its global water portfolio. A potential sale to One Rock had been rumoured for a number of weeks.

The sale includes a number of brands in the US and Canada, as well as the US direct-to-consumer and office beverage delivery service ReadyRefresh. Headquartered in Stamford, Connecticut, NWNA has approximately 7000 employees in the US and more than 230 in Canada. The unit also has 27 production facilities across North America.

“We continue to transform our global waters business to best position it for long-term profitable growth,” said Mark Schneider, chief executive of Nestlé. “This sale enables us to create a more focused business around our international premium brands, local natural mineral waters and high-quality healthy hydration products. We will also boost our innovation and business development efforts to capture emerging consumer trends, such as functional water.”

“Nestlé Waters North America’s iconic brands have earned the trust and preference of consumers everywhere due to an uncompromising commitment to quality,” said Tony W. Lee, managing partner of One Rock. “We are excited to further this commitment and build upon the market leadership of the business alongside the Company’s talented management team.”

“One Rock brings to bear extensive corporate carve out and operational capabilities that we believe will be instrumental to NWNA’s ongoing success as a standalone company,” said R. Scott Spielvogel, managing partner of One Rock. “We look forward to working closely with our Operating Partners to accelerate the growth of NWNA’s extraordinary set of attractive brands, while continuing to create value in the communities in which the Company operates.”

“I am pleased to have the opportunity to lead NWNA as it enters the next phase of evolution,” said Dean Metropoulos, founder of Metropoulos & Co. “This is an important inflection point for the business as it transitions to an independent company, and I look forward to collaborating with One Rock and NWNA’s management team to deliver unparalleled value to our customers.”

News: Nestle to sell N.American water brands for $4.3 billion, focus on premium lines

Ideal fit: Lanxess acquires Emerald Kalama in $1.1bn deal

BY Fraser Tennant

In a move designed to boost its presence in North America, Germany-based specialty chemicals company Lanxess has accelerated its growth course to acquire Emerald Kalama Chemical for an enterprise value of $1.1bn.

Lanxess has stated that it will deploy existing liquidity to purchase Emerald, which is majority-owned by affiliates of US private equity firm American Securities LLC. Like its acquirer, Emerald is a specialty chemicals company whose products include food preservatives, household and cosmetic applications, flavours and fragrances, as well as plastics and adhesives for industry.

The Cologne-headquartered company was one of a number of potential suitors for US-based Emerald, which reportedly included private equity firms HIG Capital, Rhone Capital and TPG Capital.

“We are gaining further momentum on our growth course,” said Matthias Zachert, chairman of Lanxess. “The businesses of Emerald Kalama Chemical are an ideal fit for us. We will further strengthen our consumer protection segment and open up new application areas with strong margins, for example in the food industry and animal health sector. In addition, we will also enlarge our presence in our growth region of North America. All this will make us even more profitable and stable.”

Employing 500 people, Emerald runs three production sites in Kalama in the US state of Washington, Rotterdam in the Netherlands and Widnes in the UK. The company reported 2020 sales of approximately $425m, and approximately $90m in earnings before interest, taxes, depreciation and amortisation (EBTDA).

Around 45 percent of its turnover is generated in North America.

“The company has a very efficient setup, bundling all its production activities at only three sites,” added Mr Zachert. “That is why we expect to integrate the new business very quickly.”

With the acquisition of Emerald, Lanxess is pursuing a targeted expansion of its portfolio. The company has a strong position in the global business with antimicrobial active ingredients and preservatives, including for consumer protection products and animal hygiene, such as disinfectants effective against coronavirus (COVID-19).

The deal is expected to close in the second half of 2021 subject to approval by the relevant authorities.

News: Chemical firm Lanxess buys U.S.-based Emerald Kalama in $1.1 billion deal