Forever 21 files for Chapter 11

BY Richard Summerfield

US fashion retailer Forever 21 has become the latest brick-and-mortar firm to file for Chapter 11 bankruptcy protection.

The California-based company filed for bankruptcy protection in the US Bankruptcy Court for the District of Delaware, listing both assets and liabilities in the range of $1bn to $10bn.

Forever 21 will now begin a process of restructuring. Last week, the company had announced its intention to exit Japan and close all 14 stores of its locations in the country by the end of October. The company now expects to focus on the profitable core part of its operations and shut some, if not most, of its international locations, though its operations in Mexico and Latin America will likely remain open. The company does not expect to close locations in major US markets, though there will be a large number of store closures.

“We have requested approval to close up to 178 stores across the U.S. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords,” the company said in a statement.  The company also said its Canadian subsidiary filed for bankruptcy and it plans to wind down the business, closing 44 stores in the country.

Forever 21 saw its revenue drop to $3.3bn last year, down from $4.4bn in 2016. It expects the restructured company to bring in $2.5bn in annual sales. The company employs about 32,800 people, down from 43,000 in 2016.

To facilitate its restructuring, the company has obtained $275m in financing from its existing lenders, with JPMorgan Chase Bank, N.A. acting as agent, as well as $75m in new capital from TPG Sixth Street Partners, and certain of its affiliated funds.

“This was an important and necessary step to secure the future of our Company, which will enable us to reorganise our business and reposition Forever 21,” said Linda Chang, executive vice president of Forever 21. “The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees. With support from our key landlord and vendor constituents, we are confident we will emerge as a stronger, more competitive enterprise that is better positioned to prosper for years to come, and we remain committed to delivering the fast fashion trends that our customers have come to expect from Forever 21,” she added.

News: Forever 21 closing stores in bankruptcy filing shows limits to fast fashion

No silver lining?

BY Richard Summerfield

There has been a lot of talk around the potential of cloud computing. The cloud is often heralded as the future of many organisations as it will fundamentally alter business strategies. Yet, maintaining security in the cloud is a challenging and contentious issue.

Indeed, many security professionals consider their existing tools to be inadequate for securing critical cloud data, even as their organisations invest heavily and with increasing speed in cloud applications, according to a new report from ESG.

The report, ‘Retooling CyberSecurity Programs for the Cloud-First Era’, based on surveys with responses ranging from approximately 392-600 senior IT decision makers and cyber security professionals, suggests that there is a security gap in cloud computing which is both wide and dangerous.

Though cloud-first strategies are becoming more common, 81 percent of respondents said their on-premises data security practices are more advanced than those intended to secure cloud-based data. Furthermore, 50 percent of respondents say that their organisation has lost cloud-resident data.

Ninety percent of respondents are concerned about not having visibility into misconfigured cloud services, server workloads, network security or privileged accounts. Eighty-three percent of respondents also stated they had concerns about the misuse of privileged accounts by insiders. Thirty-five percent say that the use of multiple cyber security controls has increased complexity and 66 percent say IT is more complex than it was two years ago.

Forty-three percent of respondents cited maintaining consistency across the disparate infrastructures of hybrid, multi-cloud environments where cloud-native apps are deployed as the biggest challenge in securing cloud-native apps, and 43 percent of respondents said that DevSecOps automation is the highest cloud security priority to address many of these concerns.

“The cloud is no longer merely a backup target – it’s now the center of computing gravity for many businesses,” said Doug Cahill, ESG’s Cybersecurity Group Director and Senior Analyst. “Cloud-first strategies are becoming more common, and yet security capabilities are lagging behind cloud adoption. The gap between the degree to which cloud services and cloud-native technologies have and will continue to be consumed and organizational readiness to secure that usage requires a retooling of cybersecurity programs to keep pace with the speed of the cloud era.”

Report: Retooling CyberSecurity Programs for the Cloud-First Era

Dubai Aerospace to manage $1.4bn aircraft portfolio

BY Fraser Tennant

In an investment mandate valued at approximately $1.4bn, globally recognised aerospace corporation Dubai Aerospace Enterprise (DAE) Ltd is to source and manage an aircraft portfolio on behalf of one of the world’s largest hedge funds.

DAE’ best-in-class Aircraft Investor Services (AIS) platform has been tasked with managing the portfolio of assets on behalf of the investment fund, the name of which has not been disclosed.

Moreover, the multi-year investment mandate will involve DAE assisting the investor with the capital structure for the acquired aircraft, primarily targeting used narrow-body and wide-body aircraft sourced through DAE’s global relationships in secondary market trading and sale-leaseback channels.

Headquartered in Dubai, DAE is one of the largest aircraft leasing companies in the world. Its leasing and engineering divisions serve over 125 airline customers around the world from its seven locations in Dubai, Dublin, Amman, Singapore and the US.

The addition of the investment mandate will bring DAE’s managed portfolio to over $2.7bn in assets under management (AUM). Coupled with other ongoing projects, DAE fully expects its managed portfolio to grow to its target of $5bn.

“DAE is thrilled to have the opportunity to grow its managed aircraft business by sourcing and managing aircraft for a world-class financial institution,” said Firoz Tarapore, chief executive of DAE.  “We are off to a flying start and have already sourced 25 percent of the portfolio.

“We own more than 300 aircraft and will manage more than 100 aircraft. We maintain an active dialog with 250 airline customers,” he continued. “This scale and relevance combined with our 150-person full-service platform and our industry leading AIS offering is a very compelling value proposition for investors in the managed aircraft space.”

State-controlled DAE made a first-half 2019 profit of $197.1m compared with $195.2m last year.

News: Dubai Aerospace wins $1.4 bln deal to manage aircraft

Purdue Pharma files for Chapter 11 to settle opioid lawsuits

BY Fraser Tennant

Accused of fuelling the opioid crisis which claimed the lives of almost 70,000 people in the US last year, drug maker Purdue Pharma has filed for Chapter 11 bankruptcy protection in a bid to settle the opioid litigation the company faces.

To finalise and implement the settlement agreement, the court-supervised Chapter 11 process will facilitate a resolution of all claims against Purdue and its subsidiaries, while preserving the value of the company’s assets.

Furthermore, the settlement is estimated to provide more than $10bn to address the opioid crisis, including contributing millions of doses of life-saving opioid overdose reversal medications – treatment that has the potential to reverse overdoses from powerful synthetic opioids, such as fentanyl.

The key elements of the settlement, which is subject to court approval, include: (i) the owners of Purdue contributing all of its assets to a trust or other entity established for the benefit of claimants; (ii) the new entity being governed by a new board selected by claimants and approved by the bankruptcy court; (iii) the new entity potentially contributing tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost; and (iv) the new entity agreeing to be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids.

“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” said Steve Miller, chairman of Purdue’s board of directors. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”

Across the US, more than 130 people die every day after overdosing on opioids. The misuse of and addiction to opioids – which includes prescription pain relievers, heroin and synthetic opioids, such as fentanyl – is a crisis that affects public health, as well as social and economic welfare.

Mr Miller concluded: “We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”

News: Purdue Pharma files for bankruptcy in the US

Dream deal for Blackstone

BY Richard Summerfield

Funds managed by Blackstone Group have agreed to acquire Dream Global Real Estate Investment Trust for $4.7bn.

The deal will see Dream stockholders receive C$16.79 in cash for each share they hold, a premium of 18.5 percent to Friday’s closing stock price. The deal is expected to close by December.

The deal needs at least 66.67 percent approval from Dream Global’s shareholders. Its board of trustees unanimously approved the deal and recommended the shareholders vote in favour of it.

“This transaction is the culmination of the tremendous growth that Dream Global has achieved since its 2011 IPO,” said Detlef Bierbaum, chairman of Dream Global’s board of trustees. “At a time when the Western European real estate market is becoming increasingly competitive, this transaction provides premium value to unitholders. Upon completion of the Transaction, Dream Global will have increased its equity market capitalisation by nearly eight times and will have delivered total annualised returns of 15 percent to our unitholders, since inception, which exceed both the Canadian and European REIT benchmarks by approximately 60 percent and are competitive against the best managed real estate private equity funds and pension funds globally, over the same time period.”

“Today’s announcement can be attributed to Dream Global’s high-quality portfolio of properties located in key markets in Western Europe and the strength of our property management platform, as evidenced by our strong relationships with tenants, partners and lenders,” said Jane Gavan, president and chief executive of Dream Global. “By combining a disciplined approach to capital allocation with active asset management, we have established Dream as one of the most respected brands for investing in Western European office properties.”

“We are delighted to be acquiring Dream Global, a high-quality and diversified portfolio of office and logistics assets in Western Europe, which has been created by Dream over the last eight years,” said James Seppala, head of Blackstone Real Estate Europe. “This transaction is an exciting opportunity for Blackstone to expand its existing office and logistics portfolios in some of the largest and most important markets in the region.”

Canadian REIT Dream Global, which was formerly known as Dundee International REIT, started out by acquiring properties leased to Deutsche Post, Germany’s post office. Today the firm owns over 200 office and industrial properties in key markets in Western Europe with a particular focus on Germany and the Netherlands.

News: Dream Global REIT to be bought by Blackstone funds in $4.7 billion deal