Starry files for Chapter 11 bankruptcy

BY Richard Summerfield

Boston-based internet service provider Starry Group Holdings Inc. has filed for pre-packaged Chapter 11 bankruptcy protection in an attempt to reduce its debt load while maintaining customer and network operations in five cities.

The company, which filed for Chapter 11 restructuring in the US Bankruptcy Court for the District of Delaware, has filed various motions with the Court, including one for approval of a $43m debtor-in-possession (DIP) financing facility to give it the liquidity to continue operations throughout the process. Starry has approximately $270m in assets versus $310m in total debt, according to a court document.

The bankruptcy filing comes on the back of a bruising period for the company. In January, Starry announced its decision to pull out of one of its markets – Columbus, Ohio – and lay off staff. 2022 was a challenging year as the company defaulted on the opportunity to pick up government funding and found itself the subject of endless speculation on its financial position. In October 2022, Starry laid off around half of its workforce - about 500 people - as the company did not “have the capital to fund our rapid growth”, according to Chet Kanojia, chief executive of Starry. As such, the company was going to focus on its core business of serving multitenant buildings in bigger urban markets.

“Over the last several months, we’ve taken steps to conserve capital and reduce costs in order to put Starry in the best position to explore various financing paths for the company,” said Mr Kanojia. “Our next step in this journey is to continue to strengthen our balance sheet through a Chapter 11 restructuring process. With the support of our lenders, we feel confident in our ability to successfully exit this process as a stronger company, well-positioned to continue delivering an affordable, high-quality broadband experience to our customers.

“The Restructuring Support Agreement provides us with the funding needed to continue operating as normal, through this restructuring process and as we guide the company to profitability. We have a strong and experienced team in place and look forward to moving through this process quickly so that we can continue expanding essential broadband access and #HappyInterneting to more communities across the country,” he added.

Starry currently operates in Boston, New York City, Los Angeles, Denver and Washington, DC, and reported nearly 91,300 customers at the end of September - an increase of 66 percent year-on-year.

News: Starry’s troubles continue as it files for Chapter 11

BP acquires TravelCenters of America in $1.3bn deal

BY Fraser Tennant

As part of its aim to significantly grow investment throughout this decade, petroleum company BP is to acquire the publicly traded full-service travel centre network TravelCenters of America Inc. in a transaction valued at $1.3bn.

Under the terms of the merger agreement, BP will acquire all of the outstanding shares of TravelCenters common stock for $86 per share in cash. The sale price represents an 84 percent premium to the average trading price of the 30 days ended 15 February 2023 of $46.68.

The acquisition of TravelCenters complements BP’s existing convenience and mobility business and will help expand its offers, including electric vehicle charging, biofuels, renewable natural gas (RNG) and hydrogen.

A condition of the sale is the approval by shareholders who own a majority of TravelCenters’ outstanding shares: Service Properties Trust, which owns 7.8 percent and The RMR Group, which owns 4.1 percent. Both have agreed to vote their shares in favour of the sale.

At the closing of the transaction, which has been unanimously approved its board of directors, TravelCenters will terminate its management agreement with RMR pursuant to the terms of the agreement and pay a termination fee to RMR that is currently estimated to be approximately $44m.

“The announcement that BP is acquiring TA is a result of the successful implementation of our turnaround and strategic plans,” said Jonathan M. Pertchik, chief executive of TA. “We have improved our core travel centre business, expanded our network, launched our specialised business unit eTA to prepare for the future of alternative fuels and improved our operating and financial results, none of which we could have accomplished without the hard work and dedication of our employees at every level.”

Founded in 1972 and headquartered in Westlake, Ohio, TravelCenters’ over 18,000 team members serve guests in 281 locations in 44 states, principally under the TA, Petro Stopping Centers and TA Express brands. TravelCenters’ offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking and other services.

Subject to shareholder and regulatory approval, the transacting parties are targeting closing the acquisition by mid-2023.

News: BP to buy TravelCenters for $1.3 bln in U.S. fuel retail drive

Second time around: Avaya files for Chapter 11

BY Fraser Tennant

Following months of speculation, American multinational technology company Avaya Holdings Corp. along with its US subsidiaries has filed for Chapter 11 bankruptcy and entered into a restructuring support agreement (RSA).

The filing in the US Bankruptcy Court for the Southern District of Texas is the second time in six years the North Carolina-based Avaya has sought bankruptcy protection.

The Chapter 11 process will help Avaya to implement the RSA and accelerate its ongoing business transformation, significantly enhance its ability to invest in its innovative cloud-based communications portfolio and position the company for long-term success.

Completing the RSA will reduce Avaya’s total debt by more than 75 percent, from approximately $3.4bn to approximately $800m. In addition, it will substantially increase Avaya’s cash and strengthen its liquidity position.

“Strengthening Avaya’s capital structure is a critical step to fully realize our transformation,” said Alan Masarek, chief executive of Avaya. “We are excited to move ahead as a well-capitalised company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”

“I joined Avaya to help unlock the power of its iconic brand, global customer footprint, massive partner ecosystem, large-scale communications deployments and outstanding team,” he continued. “Building on this tremendous foundation, we have made significant progress pioneering an ambitious business model transformation, establishing a competitive product strategy for our subscription and cloud-delivered services and implementing operational efficiencies to better serve the Avaya ecosystem.”

Avaya has stated that it will continue serving its customers and partners without interruption and providing them with outstanding communications solutions, service and support.

Moreover, due to the overwhelming support of its financial stakeholders, Avaya expects to implement the RSA on an expedited basis and complete this comprehensive balance sheet deleveraging within 60 to 90 days. These actions will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.

“We appreciate the strong support from our investors, who recognise the incredible value in Avaya’s business, brand and opportunities ahead,” concluded Mr Masarek. “With this additional financial strength, we will be ideally positioned to accelerate innovation and advance our cutting-edge, long-range product roadmaps for the benefit of our customers.”

News: Avaya files for Chapter 11 bankruptcy

CVS strikes $9.5bn Oak Street Health deal

BY Richard Summerfield

CVS Health Corp has agreed to acquire Oak Street Health Inc in an all-cash transaction valued at $9.5bn. The deal will allow CVS to offer routine health screenings and diagnosis to older adults.

The deal will see CVS acquire all the outstanding shares of Oak Street at $39 per share, representing an enterprise value of approximately $10.6bn. The agreed price represents a nearly 16 percent premium to Oak Street Health’s closing price last Tuesday. The parties anticipate that the deal will close in 2023.

CVS Health expects to fund the transaction through available resources and existing financing capacity. The transaction has been approved by the board of directors at each of the respective companies and is subject to approval by a majority of Oak Street Health’s stockholders, regulatory approval and satisfaction of other customary closing conditions. Private equity funds affiliated with Newlight Partners LP and General Atlantic LLC and certain members of the Oak Street Health board of directors, which collectively own approximately 45 percent of the common stock of Oak Street Health, have agreed to vote the shares they own in favour of the transaction, subject to customary exceptions.

“Combining Oak Street Health’s platform with CVS Health’s unmatched reach will create the premier value-based primary care solution,” said Karen S. Lynch, health president and chief executive of CVS. “Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected.”

“This agreement with CVS Health will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs, and providing a better patient experience while offering significant value to our shareholders,” said Mike Pykosz, chief executive of Oak Street Health. “Together with CVS Health, we will have access to greater resources and capabilities to expand the reach of our platform, provide more opportunities for our teammates and, most importantly, make a meaningful difference in the lives of the patients we serve.”

“Oak Street Health is a premier value-based primary care platform,” said Shawn M. Guertin, chief financial officer of CVS Health. “We believe that in partnership with CVS Health, Oak Street Health can accelerate its growth and provide an attractive return to our shareholders over time. The pending acquisitions of Oak Street Health and Signify Health will also meaningfully advance our goal of adding 200 basis points of long-term adjusted operating income growth, a key commitment we made to shareholders at our December 2021 Investor Day.”

The deal, CVS’ third largest in the last decade, echoes moves by rivals Walgreens Boots Alliance, Cigna and tech giant Amazon, all of which expanded their healthcare offerings, especially primary and urgent care delivery, during the coronavirus (COVID-19) pandemic. Oak Street Health has approximately 600 primary care providers and 169 medical centres across 21 states in the US.

News: CVS digs into primary care with $9.5 bln Oak Street Health deal

Holcim agrees $1.2bn Duro-Last deal

BY Richard Summerfield

Holcim AG has agreed to acquire US roofing systems manufacturer Duro-Last in a $1.29bn deal. The deal is expected to close by the second quarter of 2023, subject to customary conditions and regulatory clearance in the US.

Duro-Last currently employs around 840 workers and has annual sales of roughly $540m. The deal is expected to complement Holcim’s integrated roofing offerings, with expected synergies of $60m per year.

The transaction is valued at $1.293bn, representing a 2023 earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple of 11.9x, or 7.4x after synergies. It is earnings per share accretive from the first year. With this acquisition, Holcim’s roofing systems will exceed $4bn in net sales ahead of schedule.

“I’m excited to welcome Duro-Last into Holcim’s broad range of innovative and sustainable building solutions,” said Jan Jenisch, chief executive of Holcim. “Duro-Last is a perfect strategic fit for our roofing business. Its proprietary technologies and leading brands complement our offering in the fast-growing North American market. Its energy-efficient systems and excellence in recycling will further advance our leadership in sustainability. I congratulate the Burt family and its leadership team for developing such a thriving business, based on its strong customer relationships and most of all its empowered and dedicated people. I am excited to further strengthen the Duro-Last brand and welcome all 840 employees to the Holcim family.”

“Over the past 45 years, our family business has continually reinvested in Duro-Last to create the solid, financially strong and well-recognized company we are today,” said Tom Saeli, chief executive of Duro-Last. “We are delighted to be joining the Holcim family, which shares our core values, and we look to the future to accelerate our success. Holcim recognizes the opportunities at Duro-Last and we are confident it will support us in our future growth plans.”

This acquisition of Duro-Last advances Holcim’s ‘Strategy 2025 – Accelerating Green Growth’ with the goal to expand its Solutions & Products business to 30 percent of group net sales by 2025. In the first nine months of 2022, Solutions & Products boasted a recurring operating profit margin of 20 percent, better than the 16 percent level for Holcim as a whole.

The deal is one of the largest acquisitions Holcim has made in North America. In early 2022, it acquired Malarkey Roofing Products for $1.35bn. Holcim also acquired Firestone Building Products in April 2021.

News: Holcim cements North America push with $1.29 bln acquisition of roofing company