TGI Fridays files for bankruptcy protection

BY Richard Summerfield

Citing financial challenges resulting from the coronavirus (COVID-19) pandemic and problems with the company’s wider capital structure, restaurant chain TGI Fridays Inc filed for Chapter 11 bankruptcy protection on Saturday in the Northern District of Texas.

In a filing with the court, the company listed both assets and liabilities in the range of $100m to $500m. TGI Fridays, which is privately owned by TriArtisan Capital Advisors, will use the Chapter 11 process to “explore strategic alternatives in order to ensure the long-term viability of the brand”.

Founded in 1965 as a bar in New York, TGI Fridays rapidly expanded over the decades, peaking in 2008 with 601 restaurants in the US and a $2bn business. Today, the company counts 163 restaurants in the US, down from 269 last year. It closed 36 in January and dozens more in the week prior to the filing. The company’s sales in the US were $728m in 2023, down 15 percent from the prior year, according to Technomic.

However, thanks to the company’s franchise model, TGI Fridays said it only owns and operates 39 restaurants in the US, which is just a fraction of the 461 TGI Fridays-branded restaurants around the world. A separate entity, TGI Fridays Franchisor, owns the company’s intellectual property and has franchised the brand to 56 independent owners in 41 countries. Those other locations remain open.

“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world,” said Rohit Manocha, executive chairman of TGI Fridays. “The primary driver of our financial challenges resulted from COVID-19 and our capital structure. This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”

In September, British restaurant operator Hostmore abandoned plans to buy TGI Fridays after it was removed as the manager of TGIF Funding, which owns the right to collect royalties from the restaurant chain franchise. Hostmore's shares plummeted 90 percent, eventually leading it to announce plans to enter administration due to overwhelming debt.

The US casual dining industry has endured a turbulent few months. In September, a US bankruptcy judge approved a reorganisation plan for seafood chain Red Lobster after years of mounting losses. Italian American food chain Buca di Beppo filed for bankruptcy protection in August.

News: TGI Fridays operator files for bankruptcy amid financial woes

Global deal volume and values on the rise – report

BY Richard Summerfield

Despite several significant headwinds, global M&A deal volume and value continued to rise in Q3 2024, according to S&P Global’s ‘Q3 2024 M&A Equity Offerings Market Report’.

According to the report, stock market volatility led to a fall of nearly 33 percent in the total value of equity issuance, to $65.63bn from second quarter levels and nearly 21 percent from the same period in 2023. But the number of global M&A announcements increased quarter over quarter for the second straight period (though the increase was slight, rising just 0.36 percent) - the first time this has happened since the third and fourth quarters of 2020. Furthermore, the total value of global M&A deals increased 29.1 percent year over year to $708.74bn in the third quarter.

On a year-over-year basis, global M&A announcements increased 7.3 percent, ending a period of 10-straight quarters of declining global announcements. Deal announcement in the Asia-Pacific region were one of the key drivers of Q3 improvements. Across Asia Pacific, the number of transactions increased to 2742, up 16.1 percent from the previous quarter and 17.3 percent from the same period in 2023. Likewise, the total value of the deals announced increased to $165.81bn, almost doubling the previous quarter’s total and a 37.7 percent increase year over year.

Europe produced some year-over-year growth with M&A announcements increasing 7.0 percent to 2846 and the total value increasing 8.8 percent to $130.89bn. But M&A activity in the region fell quarter over quarter, with the number of transactions dropping 6.1 percent and aggregate value 25.8 percent.

Globally, initial public offerings (IPOs) struggled across the first three quarters of the year, driven by economic volatility and the surfeit of elections across Europe. Global IPO activity picked up from the lows in the first half of 2024, but the pace slowed compared to previous years. The value of offerings rose to $23.32bn in the third quarter, an increase of nearly 22 percent from the second quarter of 2024, but was down 32 percent from the third quarter of 2023.

The number of IPO transactions increased worldwide to 326, up from 322 in the second quarter, but down from 387 in the third quarter of 2023. There were 946 transactions across the first three quarters of 2024, down from 1061 in the first nine months of 2023. The Asia-Pacific region did buck this trend to an extent, and India in particular was a relative hotbed of IPO activity, with the number of deals across the country up 32.3 percent year over year to 262 for the first nine months of 2024. Over the same period, the growth in total value has been smaller, however, up 12.7 percent year over year to $7.65bn.

Report: Q3 2024 M&A Equity Offerings Market Report

Auto parts provider ATD files for Chapter 11

BY Fraser Tennant

In what is the latest auto parts provider to head to bankruptcy court, American Tire Distributors (ATD) has filed for Chapter 11 bankruptcy in order to implement a restructuring support agreement (RSA).

The Chapter 11 filing is the second time ATD has sought bankruptcy protection in six years – one of a number of auto parts retailers and distributors that have been battling financial distress in 2024 as they face headwinds from several industry challenges.

The RSA contemplates transitioning ownership of the company through a competitive sale process with certain lenders, including credit funds and accounts managed by Guggenheim Partners Investment Management, LLC, KKR, Monarch Alternative Capital LP, Sculptor Capital Management, Inc. and Silver Point Capital, L.P.

The contemplated transaction would eliminate a significant amount of debt and provide access to new capital, positioning the business as a stronger partner to manufacturers and customers who rely on ATD to improve their productivity, profitability and performance.

“For nearly 90 years, ATD has continuously evolved to meet the dynamic shifts and challenges facing the auto aftermarket,” said Michael Feder, interim chief executive of ATD. “We are now taking further steps to position ATD for our next phase as a stronger distribution partner to our manufacturers and customers as we return to our roots and hone our core value proposition as a wholesale distributor.

“Since being named interim chief executive, I have seen how impactful our business is to the manufacturer partners, customers, associates and communities we support, and this process will serve to reinforce those relationships,” he continued. “Our operations remain steady and, by moving forward with new owners on stronger financial footing.”

To ensure continued business operations, ATD has secured commitments for $250m in new financing from the aforementioned lender group, as well as access to $1.2bn in debtor in possession (DIP) financing from lenders under the company’s prepetition asset-based lending (ABL) facility , in the form of post-petition financing credit facilities. 

Upon court approval, the DIP financing, coupled with cash generated from the company’s ongoing operations, is expected to provide sufficient liquidity to support the business during the Chapter 11 and RSA processes.

Mr Feder said the company was confident that entering into these processes with the support of the lender group would enable ATD to execute its business strategy and achieve our long-term objectives.

News: American Tire Distributors lines up sale to lenders in bankruptcy

Sanofi to sell Opella to CD&R in €16bn deal

BY Fraser Tennant

In a transaction with an enterprise value of €16bn, French drugmaker Sanofi is to sell a 50 percent controlling stake in its consumer health business Opella to US private equity firm Clayton Dubilier & Rice (CD&R).

CD&R’s acquisition of Opella paves the way for the creation of a new, standalone leader in consumer healthcare, while supporting Sanofi’s strategy and increased focus on innovative medicines and vaccines.

French public investment bank Bpifrance is expected to become a minority shareholder, taking a stake of around 2 percent and a seat on the board of Opella.

“This is an exciting opportunity for CD&R to partner with Sanofi, one of the world’s leading healthcare companies,” said Eric Rouzier, partner and head of European Healthcare at CD&R. “Opella is differentiated by the quality of its brand portfolio and its highly skilled and motivated workforce.”

Headquartered in France, Opella employs over 11,000 people and operates in 100 countries with 13 manufacturing sites and four science and innovation development centres. With a portfolio of iconic brands, such as Allegra, Doliprane and Dulcolax, Opella is the third-largest business worldwide in the over-the-counter and vitamins, minerals and supplements market, serving more than half a billion consumers worldwide.

“This acquisition is a major and exciting milestone in Opella's journey,” said Julie Van Ongevalle, president and chief executive of Opella. “Partnering with CD&R will allow Opella to unlock its full development potential, to further drive value creation and deploy the exceptional talent of our teams to become a leading company in the fast-moving consumer healthcare space.”

The transaction, which is expected to close in Q2 2025 at the earliest, is subject to finalisation of definitive agreements, completion of the appropriate social processes and customary statutory approvals.

“We are proud of what Opella and its inspired people have already accomplished and are confident that the future will be even brighter,” concluded Mr Hudson. “We share the love and emotional attachment to Opella’s brands, hence our decision to remain vested in its future.”

News: Sanofi reaches deal on terms of sale of consumer health arm, say French government sources

EQT and others acquire Nord Anglia Education in $14.5bn deal

BY Richard Summerfield

Swedish private equity firm EQT, Neuberger Berman Private Markets and the Canada Pension Plan (CPP) Investment Board have agreed to acquire international schools operator Nord Anglia Education in a deal worth $14.5bn including debt.

The deal will see the EQT-led consortium acquire a majority stake in Nord Anglia, which operates over 80 schools in 33 countries and educates more than 85,000 students worldwide.

Existing owners EQT and CPP Investments will remain shareholders in the company through a new fund investment and reinvestment, respectively, the firms noted in a statement announcing the deal. Nord Anglia’s relationship with EQT began with the firm’s initial investment in 2008. In 2017, EQT strengthened its commitment by increasing its stake in the company and welcoming CPP Investments as a partner. EQT is investing in Nord Anglia through its BPEA Private Equity Fund VIII.

“Nord Anglia’s extensive track record and unwavering commitment to supporting over 85,000 students worldwide uniquely positions the company for future growth,” said David Stonberg, managing director at Neuberger Berman. “We are honored to lead a consortium of investors who share our passion for delivering exceptional educational experiences.”

“We are excited to partner with the EQT team, whose deep industry expertise and proven collaboration with Nord Anglia’s management enhance this investment,” added Jonathan Shofet, managing director at Neuberger Berman. “Together with CPP Investments, we aim to support Nord Anglia’s mission of delivering world-class education.”

“EQT has had the privilege of partnering with Nord Anglia since 2008, and we’ve developed a deep connection with this exceptional business,” said Jack Hennessy, a partner within the advisory team at EQT. “Over the years, we’ve witnessed Nord Anglia grow from six schools to more than 80 which today serve more than 85,000 students across the globe. Alongside this growth, we’re proud to have helped elevate teaching excellence through industry-leading partnerships established under our ownership. With today’s announcement, we are thrilled to continue this journey with Neuberger Berman, CPP Investments, and our global institutional co-investors, and support Nord Anglia’s continued success and innovation in the global education space.”

“Nord Anglia was CPP Investments’ first direct equity investment in the private education sector, and we are proud to have been a partner, alongside EQT, in its growth globally over the years,” said Caitlin Gubbels, senior managing director & global head of private equity at CPP Investments. “Our reinvestment allows us to remain committed to Nord Anglia while delivering an attractive return to the CPP Fund. We are highly confident in the growth potential of the sector and look forward to working with new investors.”

“Families choose our schools because we help our students gain the academic outcomes, confidence, and life skills they need to succeed in the future,” said Andrew Fitzmaurice, chief executive of Nord Anglia Education. “At the heart of our students’ achievements are our high-quality teachers. Our ability to attract and develop outstanding teachers sees us receive over 60 applications for every teaching vacancy, reflecting the strength of our world-class professional learning program and career pathways.”

He continued: “Since day one, EQT and CPP Investments have shared our educational philosophy and with the addition of Neuberger Berman, we are further strengthening this successful partnership. Focused on improving students’ outcomes, we will accelerate our research of new teaching and learning practices, curricula innovation, and the growth and development of our global teaching community.”

News: Sweden’s EQT, others to take control of Nord Anglia for $14.5 billion