PG&E files Chapter 11 exit plan

BY Richard Summerfield

Californian energy provider PG&E Corp has filed a reorganisation plan which proposes to cap the wildfire liabilities that forced it into bankruptcy at about $18bn — less than half of what victims and insurers have said they are owed.

The plan, which was filed in US Bankruptcy Court in San Francisco, includes payments capped at $8.4bn for wildfire victims, payments capped at $8.5bn for reimbursing insurers that had paid victims and a $1bn settlement with local governments. The company was forced to file for Chapter 11 bankruptcy in January to deal with an estimated $30bn in liabilities related to devastating wildfires that its equipment ignited in 2017 and 2018. In its filing, the company listed $51.69bn in debts and $71.39bn in assets.

However, the exit plan may prove controversial as lawyers for fire victims said the company’s liabilities may top $40bn. Furthermore, insurance companies claim PG&E owes them approximately $18bn.

“This is outrageous,” said Gerald Singleton, a lawyer representing around 5500 wildfire victims. “PG&E is short changing the wildfire victims and is attempting to evade its responsibility.”

“Under the Plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California's clean energy goals,” said Bill Johnson, PG&E’s chief executive and president. “Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process.”

Prior to the filing of its restructuring plan, the company has fended off a number of potential takeover and equipment offers. Last week, the city of San Francisco is believed to have offered $2.5bn for the company’s electrical equipment. The city’s offer is 35 times PG&E’s estimated 2019 earnings for the assets and described it as “a very attractive premium valuation” considering the company’s bankruptcy and other recent utility takeovers.  However, this offer was rebuffed.

Going forward, PG&E said it would employ a combination of debt and stock to raise the cash to help finance its exit from bankruptcy.

News: PG&E proposes reorganization plan with $17.9 billion for wildfire claims

Prudential acquires personal and financial health platform in $2.35bn deal

BY Fraser Tennant

In a transaction valued at $2.35bn, Prudential Financial is to acquire Assurance IQ – a direct-to-consumer platform that transforms the buying experience for individuals seeking personalised health and financial wellness solutions.

Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019.

A financial wellness leader and premier active global investment manager with more than $1 trillion in assets under management, Prudential has operations in the US, Asia, Europe and Latin America. Its board of directors has unanimously approved the deal to acquire Assurance’s technology-driven, on-demand service platform.

“Assurance was founded to protect and improve the personal and financial health of every individual,” said Michael Rowell, co-founder and chief executive of Assurance. “Prudential’s shared vision, coupled with the strength of its offering and capabilities, make it the ideal partner with which to begin our next chapter. We are excited to create an ecosystem that reaches more people and new markets with a more expansive suite of products to drive our combined growth.”

Launched in 2016, Assurance uses advanced data analytics to match buyers with customised solutions spanning life, health, Medicare and auto insurance, giving them options to purchase entirely online or with the help of a technology-assisted live agent.

Assurance also matches consumers with the live agent or specific sales process that is best suited to their needs, resulting in better customer outcomes that drive higher levels of engagement and conversion.

“Assurance accelerates the strategy and growth potential of Prudential’s financial wellness businesses, bringing us closer to more people across the entire socio-economic spectrum to better serve the full picture of their needs,” said Charles Lowrey, chairman and chief executive of Prudential. “We look forward to working with Mike Rowell and his entire team to grow the Assurance business in the U.S., and, over time, to extend its unique approach to customers around the world.”

In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition of Assurance is expected to generate cost savings of $50m to $100m.

News: Prudential buys Assurance IQ for $2.35 billion in new tech bet

J2 acquires APi in $2.9bn transaction

BY Fraser Tennant

In a $2.9bn deal it describes as an “excellent fit”, investment vehicle J2 Acquisition Limited is to acquire commercial life safety solutions and industrial specialty services provider APi Group, Inc.   

A publicly-listed acquisition company that listed in October 2017, J2’s definitive agreement to acquire APi is its debut transaction.

Operating in over 200 locations across the US, Canada, and the UK, APi is the leading independent life safety services provider and a top-five specialty services contractor.  Once the acquisition is complete, J2 plans to continue to build on APi's operating strengths with a focus on expanding the service portion of the business across its portfolio.

"The J2 team's decades of leadership experience operating large diverse businesses, broad industrial knowledge, and disciplined acquisition strategy – that they have employed successfully at previous companies and ventures – will be instrumental in further growing APi's inherent value and innovative, customer-centric approach over the long-term,” said Russell A. Becker, president and chief executive of APi .

The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions. Following closing, APi's existing management team will remain in place.

"We were immediately impressed by APi's management team, its strong culture and its commitment to leadership development, combined with consistent delivery of margins and cash flow at the high-end of its peer group over the years,” said James E. Lillie, co-founder of J2. “The business operates in resilient and dynamic markets with attractive growth drivers and we believe that, with the current management team, we can drive shareholder value by guiding the business to even better levels of performance and growth.”

Sir Martin E. Franklin, co-founder of J2, concluded: “We believe APi is an excellent foundation for J2's initial investment and is solidly in line with our disciplined investment criteria. We look forward to working with APi and to the strong growth opportunities ahead.”

News: Franklin's J2 blank check company buys APi Group for $2.9 billion

Two-month turnaround sees Monitronics emerge from Chapter 11

BY Fraser Tennant

A little over two months since it filed, Monitronics International, the second-largest residential security provider in the US, has eliminated approximately $885m of its debt to successfully emerge from Chapter 11 bankruptcy protection.

Upon emergence, Monitronics gained access to $295m of additional liquidity under new exit financing – consisting of a $150m term loan facility and a $145m revolving facility – to support its continued growth and ensure it can continue to execute its strategic plan.

Moreover, as a result of its financial recapitalisation, which involves a merger with Ascent Capital Group, Inc., Monitronics’ largest shareholders will be EQT Partners, a global investment firm with around €40bn in assets under management (AUM), and Brigade Capital Management, a global investment management firm.

Additionally, Monitronics has appointed a new board of directors to provide critical expertise and experience as it enters the next phase of its growth.

“This is an exciting day for Monitronics as we have emerged as a stronger, more focused organisation,” said Jeffery Gardner, president and chief executive of Monitronics. “With renewed balance sheet strength, a strong subscriber portfolio and recurring revenue base, and the support of EQT and Brigade, two highly regarded financial sponsors, we are well-positioned to be a leader in the accelerating home security market and to execute on the vast growth opportunities ahead.”

One of the largest home security and alarm monitoring companies in the US, Monitronics secures approximately 900,000 residential and commercial customers through security solutions backed by trained professionals. The company has the nation’s largest network of independent authorised dealers – providing products and support to customers in the US, Canada and Puerto Rico.

“We are pleased to have worked collaboratively with Monitronics and its stakeholders to facilitate a balance sheet recapitalisation that optimally positions the company for success,” said Stephen Escudier, a partner at EQT Partners. “As Monitronics largest shareholder, we look forward to partnering with the company’s management team as they execute on their strategic vision and continue to build Monitronics’ position as an industry leader.”

Mr Gardner concluded: “I want to thank our dedicated team of employees as well as our dealers, customers and suppliers, who continued to believe in our company and worked with us to achieve this successful balance sheet recapitalisation.”

News: Monitronics emerges from Chapter 11, merges with Ascent Capital

BP to sell Alaska business to Hilcorp in $5.6bn deal

BY Fraser Tennant

In a transaction valued at $5.6bn, BP is to sell all of its Alaska operations – including interests in the giant Prudhoe Bay field and Trans Alaska Pipeline – to oil and natural gas exploration and production company Hilcorp Energy.

The deal forms a significant part of BP's plan to divest $10bn of assets over 2019 and 2020.

The sale of BP’s Alaska business to Hilcorp includes its entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., which owns all of BP's upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.'s interest in the Trans Alaska Pipeline System (TAPS).

Hilcorp’s affiliate, Hilcorp Alaska, is based in Anchorage and has been operating in the state since 2012. The company currently produces more than 75,000 barrels of oil-equivalent per day in gross production.

"Alaska has been instrumental in BP's growth and success for well over half a century and our work there has helped shape the careers of many throughout the company,” said Bob Dudley, group chief executive of BP. “We are extraordinarily proud of the world-class business we have built, working alongside our partners and the State of Alaska, and the significant contributions it has made to Alaska's economy and America's energy security.

“However, we are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment,” he continues. “This transaction also underpins our divestment programme, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP's portfolio within our disciplined financial framework.”

The deal is subject to state and federal regulatory approval and is expected to be completed in 2020.

“Our people have achieved incredible success over the decades developing and maintaining these hugely important assets,” said Janet Weiss, regional president of BP Alaska. “We are confident this sale is in BP’s and the state’s best interests and the business will be best positioned for the future with Hilcorp.”

News: BP to quit Alaska after 60 years with $5.6 billion sale to Hilcorp