Data centre operator Cyxtera files for Chapter 11

BY Fraser Tennant

In a bid to put itself on a more solid financial footing, data centre operator Cyxtera Technologies Inc. and certain of its subsidiaries has filed for Chapter 11 bankruptcy protection.

Cyxtera’s bankruptcy filing – which does not include its subsidiaries in Germany, Singapore and the UK – is pursuant to a previously disclosed restructuring support agreement (RSA) it reached with certain of its lenders holding over two-thirds of its outstanding term loan.

The company expects to use the Chapter 11 process to strengthen its financial position, meaningfully deleverage its balance sheet and facilitate the business’s long-term success.

In addition, Cyxtera has received a commitment for $200m in debtor-in-possession (DIP) financing from certain of the term lenders, which is convertible into an exit facility upon the company's emergence from the court-supervised process. This new financing is expected to provide sufficient liquidity to support Cyxtera during this process and beyond.

“We have thoroughly evaluated options to enhance value for the company and our stakeholders,” said Nelson Fonseca, chief executive of Cyxtera. “Together with our lenders, we determined that initiating this process is the best path forward for Cyxtera and our stakeholders as we pursue new opportunities for growth.

“We appreciate the significant support from our lenders, which will enable us to move through this process as quickly as possible,” he continued. “We are confident these steps will enable us to position our business for the long term as we continue serving our customers with innovative services and the highest levels of support.”

A global leader in colocation and interconnection services, with a footprint of more than 60 data centres in over 30 markets, Cyxtera provides more than 2300 enterprise and government customers with the technology solutions they need to scale faster, achieve financial goals and gain a competitive advantage.

“Our recent business momentum and the high demand for our global data centre platform are a testament to the hard work and commitment of our team, as well as to the continued support of our customers and business partners,” concluded Mr Fonseca. “We look forward to emerging from this process as a stronger organisation with additional financial flexibility to drive Cyxtera’s next phase of growth.”

News: Data-center operator Cyxtera files for bankruptcy

CIRCOR taken private in $1.6bn deal

BY Richard Summerfield

Private equity giant KKR & Co has agreed to take industrial machinery maker CIRCOR International Inc private in a deal worth $1.6bn.

Under the terms of the agreement, KKR will pay $49 per share, a premium of nearly 55 percent to CIRCO’s last closing stock price on Friday 2 June.

CIRCOR’s board has unanimously approved the transaction and recommended that shareholders vote in its favour. The deal is expected to close in the fourth quarter of 2023, subject to the receipt of approval from the company’s shareholders and certain required regulatory approvals, as well as the satisfaction of other customary closing conditions. Upon completion, CIRCOR will be a privately held company wholly owned by KKR’s investment funds and will no longer have its common stock listed on any public market.

“Our agreement with KKR marks the successful culmination of a strategic review process conducted by the Board, supported by external advisors and the management team,” said Helmuth Ludwig, chair of the board of CIRCOR. “As part of our comprehensive strategic review, initiated in March 2022, we engaged in extensive dialogue with a number of parties that expressed interest in acquiring all or parts of the Company. We believe that this transaction and the immediate cash value it will provide to CIRCOR’s stockholders best achieves the Board’s goal of unlocking the significant incremental value within CIRCOR for its stockholders. This transaction is a testament to the dedication of CIRCOR’s talented team and we are grateful for their tireless efforts and commitment to making CIRCOR an industry leader.”

“This transaction will create significant value to our stockholders, reflecting the dedication of our team in executing on our strategic priorities, the strength of our family of brands and the deep relationships we have built with our customers,” said Tony Najjar, president and chief executive of CIRCOR. “We believe that having the support and resources of an experienced investor like KKR will help us expand our presence in the flow control space and support our mission to deliver the highest-quality products and services to our customers, many of which play a critical role in protecting national security.”

“CIRCOR stands out as an innovative and trusted solution provider, manufacturing mission-critical flow control products for industrials, aerospace and defense customers,” said Josh Weisenbeck, a partner at KKR. “We believe the Company is in a strong position to grow and benefit from the attractive tailwinds in those markets. We look forward to working closely with Tony and his talented team to drive further growth and value through new product development, aftermarket expansion, strategic acquisitions and allowing all CIRCOR employees to have the opportunity to participate in the benefits of ownership of the Company.”

CIRCOR has around 3100 employees and manufactures pump and valve systems for sectors including oil & gas, industrial, aerospace and defence.

News: KKR to take machinery maker Circor private in $1.6-bln deal

Asda to acquire EG Group

BY Richard Summerfield

British supermarket chain Asda has agreed to acquire the UK operations of petrol station giant EG Group, which is also owned by the Issa brothers and TDR Capital, in a £2.27bn deal.

Under the terms of the deal, Asda will acquire 350 petrol stations and more than 1000 food-to-go sites. The company plans to roll out the Asda Express convenience format across the EG UK and Ireland estate.

Asda intends to invest more than £150m within the next three years to “fully integrate the combined business” with shareholders, providing £45m of additional equity to fund the transaction. Upon completion, the merged business will have almost £30bn sales with EG UK and Ireland contributing £195m earnings before interest, taxes, depreciation and amortisation (EBITDA) to the group after rents. Going forward, Asda expects to realise synergies of £100m over the next three years. The company also expects to find more than £100m of working capital benefits due to its larger scale.

“Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen,” said Stuart Rose, chair of Asda. “Throughout my career in retail – one thing has always been true, that meeting the evolving needs of customers is the route to growth. This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”

“This transaction with Asda represents an important strategic step for EG Group,” said Zuber Issa co-founder and co-chief executive of EG Group. “Following this sale, EG Group will benefit from a significantly strengthened balance sheet, supporting the continued roll out of its successful convenience retail, fuel and foodservice strategy and drive innovation to transform the consumer experience. This includes the ongoing investment and expansion of our EV charging business, evpoint, as well as hydrogen and other sustainable fuel retail infrastructure, which we continue to see as a significant future opportunity.”

“The sale of the EG UK&I business to Asda makes strategic sense for both parties and will enable EG Group to accelerate its growth in key markets including Europe, the US and Australia,” said Gary Lindsay, managing partner at TDR Capital. “The Group has developed a successful blueprint in the UK for developing one-stop shop sites which combine convenience retail, fuel and foodservice and there are significant value creation opportunities from rolling out this model, across the global estate. The Group remains at the leading edge of developing the forecourts of the future, and its ongoing development of alternative fuels and EV charging infrastructure.”

The deal, which is expected to close in Q4 2023, will be funded by £450m of equity from Asda’s shareholders, including its former owner, US retail giant Walmart, £770m of term loan debt and around £1.1bn from property-related transactions, including the sale and leaseback of some of its stores.

News: UK's Asda to buy EG petrol stations unit in $2.9-bln deal

ConocoPhillips buys remaining Surmont stake for $4bn

BY Fraser Tennant

Exercising its first right of refusal, Alaska's largest crude oil producer ConocoPhillips is to acquire TotalEnergies SE’s 50 percent stake in the Surmont oilsands field in Alberta for $4bn.

Currently holding a 50 percent interest as operator of Surmont, ConocoPhillips will own 100 percent upon closing. The acquisition thwarts efforts by Suncor Energy Inc. to buy into the Alberta site.

The transaction will be funded from either cash, short- and medium-term financing or a combination of both. The deal is also subject to contingent payments for a five-year term of up to approximately $325m representing $2m for every dollar that Western Canada Select pricing exceeds $52 per barrel during the month, subject to certain production targets being achieved.

Additionally, the transaction is structured as an asset purchase and the tax pools will be commensurate with the purchase price of the asset, including associated contingent payments.

“The acquisition reflects our ongoing commitment to enhance our returns-focused value proposition, improving our return on capital employed, lowering our free cash flow breakeven and further supporting our $11bn planned return of capital in 2023,” said Ryan Lance, chairman and chief executive officer of ConocoPhillips. “Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio.

“Upon close, we look forward to leveraging our position as 100 percent owner and operator of Surmont to further optimise the asset while progressing toward our overall interim and long-term emissions intensity objectives,” he continued. “We will remain on track to achieve our previously announced accelerated greenhouse gas (GHG) intensity reduction target of 50 to 60 percent by 2030, using a 2016 baseline.”

Headquartered in Houston, Texas, ConocoPhillips is one of the world’s leading exploration and production companies based on both production and reserves, with a globally diversified asset portfolio. The company has operations and activities in 13 countries and approximately 9600 employees.

Expected to close in the second half of 2023, the transaction is subject to regulatory approvals and other customary closing conditions.

News: ConocoPhillips to buy rest of Canada's Surmont oil site, bumping Suncor

UK chemicals giant Venator files for Chapter 11

BY Fraser Tennant

Following a period of mounting losses, UK-based chemical giant Venator Materials PLC has agreed a recapitalisation plan with its lenders and noteholders as part of a bid to rescue the business.

To be implemented through a pre-packaged Chapter 11 bankruptcy in the US, the plan will equitise nearly all of Venator’s funded debt, strengthen its balance sheet and facilitate an infusion of new capital, which will position the company for future growth and success.

Moreover, the plan will be financed by a debtor-in-possession (DIP) financing facility, which includes a commitment for $275m in new-money financing from the company’s supporting creditors.

Following approval by the court, the DIP financing, together with cash on hand and cash generated from ongoing operations, is expected to provide substantial liquidity to support Venator throughout the recapitalisation process and beyond.

A global manufacturer and marketer of chemical products, Venator’s offerings comprise a broad range of pigments and additives that bring colour and vibrancy to buildings, protect and extend product life and reduce energy consumption. Based in Wynyard, UK, the company employs approximately 2800 associates and sells its products in more than 106 countries.

“We have faced unprecedented economic headwinds, including significantly lower product demand and higher raw material and energy costs in the second half of 2022,” said Simon Turner, president and chief executive of Venator. “The agreement we have reached with our lenders on a recapitalisation plan will significantly reduce Venator’s debt burden and place the company on a sound financial footing, which will enable us to deliver on our strategy and capitalise on future growth opportunities.”

Venator's businesses are expected to continue to operate as normal for the duration of the Chapter 11 process and Venator expects to continue to pay wages and benefits to its global workforce and pay all trade partners.

Throughout the court-supervised bankruptcy process, Venator will remain in possession and control of its assets, as well as retain its existing management team and board of directors.

Venator expects to complete its Chapter 11 process within approximately two months.

Mr Turner concluded: “Venator’s management, alongside our advisers, has worked tirelessly to assess all viable options available to us to ensure the long-term sustainable success of the company.”

News: Venator files for Chapter 11 bankruptcy process as US shares to be delisted