CD&R acquires Focus Financial Partners in $7bn transaction

BY Fraser Tennant

In a deal that will take it private, fiduciary wealth management firm Focus Financial Partners Inc is to be acquired by affiliates of US private equity firm Clayton, Dubilier & Rice (CD&R) in an all-cash transaction valued at $7bn.

Under the terms of the agreement, Focus’ stockholders will receive $53 in cash per share, representing an approximately 36 percent premium to Focus' 60-day volume weighted average price as of the close on 1 February 2023.

“Focus represents an outstanding collection of leading registered investment advisers (RIAs) and business managers,” said David Winokur, a partner at CD&R. “Our investment is predicated on having greater financial and operating flexibility as a private company in order to support and drive collaboration amongst these entrepreneurial partners.”

Funds managed by Stone Point Capital LLC have agreed to retain a portion of their investment in Focus and provide new equity financing as part of the transaction.

“We are excited to be continuing the journey with the Focus partnership,” said Fayez Muhtadie, managing director of Stone Point. “We firmly believe in the secular tailwinds supporting the wealth management industry and that Focus, as a private company, will be even better positioned to capitalise and continue its track record of growth.”

The board of Focus has approved the proposed transaction on the recommendation of a special committee of all the independent directors of Focus.

“This transaction represents an important evolution in the resources we will have to invest, enabling us to increase the value we deliver to our partners and their clients,” said Rudy Adolf, founder and chief executive and chairman of Focus. “Our diverse and growing partnership creates enduring advantages and we are pleased to have reached an agreement with CD&R that delivers significant immediate cash value to Focus’ stockholders.”

Closing of the transaction – which is expected in the third quarter of 2023 – is subject to stockholder approval, regulatory approvals and other customary conditions.

Mr Adolf concluded: “We are uniquely positioned to capitalise on industry trends while offering the expertise and resources that help our partners provide differentiated service to their clients.”

News: CD&R to take Focus Financial private in over $7 bln deal

Failed battery firm gets a Recharge

BY Richard Summerfield

Recharge Industries, an Australian portfolio company of privately owned US firm Scale Facilitation, has been successful in its bid for ownership of Britishvolt, the battery manufacturer which collapsed into administration in January.

Under plans presented by Recharge Industries, the Britishvolt project will make the UK’s first gigafactory a reality, creating a strategic economic and security asset which will play a critical role in the UK’s industrial and net-zero strategies. The newly acquired Britishvolt will provide thousands of green, skilled and local jobs that will drive local and national benefits, according to a statement announcing the deal.

“We are thrilled to have been successful in our bid for ownership of Britishvolt; our plans are the right ones for the local community and the UK economy,” said David A. Collard, founder and chief executive of Scale Facilitation. “Our proposal combined our financial, commercial, technology and manufacturing capabilities, with a highly credible plan to put boots and equipment on the ground quickly. Our technology – including an exclusive license for the intellectual property and battery technology – has been developed and validated over the last decade through C4V in the US and will be the backbone of both gigafactories in Geelong and Cambois. Backed by our global supply chain, strategic delivery partners and a number of significant customer agreements in place, we’re confident of making the Cambois Gigafactory a success and growing it into an advanced green energy project.”

The original Britishvolt was intended to create a home-grown EV battery industry that can support domestic car production, but the company collapsed in January after failing to raise enough funding for the factory in northern England. The company was a much-heralded part of the UK government’s ‘levelling up’ agenda, however Britishvolt had only raised around £200m by summer 2022 and had pushed back its production timeline. The government had offered £100m to the former Britishvolt owners if they hit certain construction milestones, but they were not met.

The company was planning to build its 30GWh factory in phases to take advantage of rising EV demand ahead of the UK’s 2030 ban of new petrol and diesel cars. The plant, located near Blyth in Northumberland, was expected to employ about 3000 people when operating at full capacity.

Going forward, the new owners will keep the Britishvolt brand name but will focus on batteries for energy storage and hope to have those products available by the end of 2025. Recharge also plans to build a battery factory in Geelong, a former car manufacturing hub in Australia, free from Chinese and Russian materials.

News: Australia's Recharge Industries buys failed battery firm Britishvolt

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