McDermott launches Chapter 11 restructuring plan

BY Fraser Tennant

In a restructuring transaction that eliminates over $4.6bn of its debt, technology, engineering and construction solutions provider McDermott International has filed for Chapter 11 bankruptcy protection.

The Chapter 11 restructuring process will be financed by a debtor-in-possession (DIP) financing facility of $2.81bn. Subject to court approval, McDermott expects the DIP financing, combined with cash generated by McDermott, to enable it to stabilise its cash flows, continue operating in the normal course and fulfil its commitments to key stakeholders, including customers, suppliers, joint-venture partners, business partners and employees.

The Chapter 11 process has the support of more than two-thirds of all McDermott’s funded debt creditors, including the company’s unsecured bondholders.

“The restructuring transaction is further recognition of McDermott's fundamentally solid operating business and proven strategy," said David Dickson, president and chief executive of McDermott. “Our record backlog, the majority of which has been booked in the last two years, and high rate of new project awards demonstrates our customers’ continued confidence in our business, the demand for our skills and our long-term opportunities ahead.”

McDermott expects all of its businesses to continue to operate as normal for the duration of the restructuring. The company also expects to continue to pay employee wages and health and welfare benefits, and to pay all suppliers in full. All customer projects are expected to continue uninterrupted on a global basis.

"This financial restructuring will create a sustainable capital structure that matches the strength of our operating business, continued Mr Dickson. “As a result of the transaction, we are eliminating over $4.6bn in debt from our balance sheet and we will emerge with robust liquidity and significant financing to execute on customer projects in our backlog.”

Operating in over 54 countries, McDermott's locally focused and globally integrated resources include more than 42,000 employees, a diversified fleet of speciality marine construction vessels and fabrication facilities around the world.

Mr Dickson concluded: “McDermott will emerge a stronger, more competitive company with a solid financial foundation, and we will build upon our reputation as a premier, fully integrated provider of technology, engineering and construction solutions to the energy industry.”

News: McDermott to file for Chapter 11 bankruptcy protection

Far Point goes Global

BY Richard Summerfield

The blank cheque FinTech firm Far Point Acquisitions has agreed to acquire shopping tax refund company Global Blue in a $2.6bn deal. The deal is expected to close in the second quarter of 2020.

Far Point’s majority owner, private equity investor Silver Lake, will retain around 42 percent of the combined company, according to a statement announcing the deal. Under the terms of the deal, Far Point will invest $650m in cash, while Ant Financial and Third Point have agreed to invest a total of $350m in the newly combined company.

Far Point is a special purpose acquisition company (SPAC) established by hedge fund Third Point LLC and ex-New York Stock Exchange president Thomas Farley. Going forward, Global Blue’s chief executive Jacques Stern will continue to lead the combined company, and Mr Farley will become chairman of the firm.

“Global Blue is the clear market leader in the attractive and growing Tax Free Shopping ecosystem worldwide,” said Mr Farley. “The company has achieved remarkable progress in digitalization, geographic expansion and strategic value creation under Jacques’ leadership and the stewardship of its existing shareholders, including controlling shareholder Silver Lake, whose principals I have known personally and professionally for years. I look forward to working with Global Blue to capitalize on favorable trends in the business, including the growth of the emerging markets middle-class, positive VAT dynamics, and further digitalization.”

“I am delighted about this collaboration with Far Point and Tom, as I believe it will help create long-term value for Global Blue and its shareholders,” said Mr Stern. “In recent years, we have built a true leader in our industry, powered by a cutting-edge integrated technology platform. We strongly believe that continued investment in innovation will bring value to all our partners and customers, and we look forward to accelerating our strategic collaboration with Ant Financial as a showcase of such innovation.”

The new public company will be incorporated in Switzerland and will trade as Global Blue upon closing.

News: Far Point to buy tax-free shopping firm Global Blue at $2.6 billion valuation

Visa make $5.3bn FinTech bet

BY Richard Summerfield

Payments giant Visa Inc has agreed to acquire FinTech start-up Plaid Inc in a deal worth $5.3bn. The deal is expected to close in the next three to six months, pending regulatory approval and customary closing conditions.

In late 2018, Visa and rival Mastercard both made “strategic investments” in Plaid as part of a $250m Series C funding round which valued the company at $2.65bn. A little over a year later, Visa has returned to acquire the rest of the company.

Plaid develops financial services application programming interfaces (APIs) and helps developers share banking and other financial information more easily and thus is a logical target for Visa. Since launching in 2013, the company has begun to work with over 11,000 financial institutions across the US, Canada and Europe and connects to more than 200 million consumer accounts. Plaid’s software enables providers of financial technology to connect to the bank accounts of their customers.

Visa said it will fund the deal using cash on hand as well as debt that will be issued at a later date. The acquisition will not impact upon Visa’s previously announced stock buyback or dividend plans.

“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” said Al Kelly, chief executive and chairman of Visa. “Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.”

“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale,” said Zach Perret, chief executive and co-founder of Plaid. “Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”

News: Visa to pay $5.3 billion to buy fintech startup Plaid

Thomas Health poised to restructure under Chapter 11

BY Fraser Tennant

Due to significant financial challenges largely beyond its control, healthcare provider Thomas Health has filed for Chapter 11 bankruptcy protection in order to advance its strategic alternatives, including restructuring options to address its long-term debt.

Despite the filing, the company is keen to stress that it is not closing its doors and that there are no planned changes to employment, services or how it delivers care to its patients. Furthermore, the Chapter 11 process is not expected to affect enrolment of patients or employers in healthcare plans throughout 2020.

“By addressing our debt structure now, we can secure the long-term future of Thomas Health,” said Dan Lauffer, chief executive of Thomas Health. “This is not a Thomas Health-only problem. Many hospital systems throughout the country are experiencing financial challenges and are now taking similar actions. We appreciate our community’s support as we continue serving the best interests of our patients, employees, physicians and all those whose livelihoods will be positively impacted by Thomas Health’s mission to each of communities that we proudly serve.”

A partnership built on the strengths between Thomas Memorial Hospital and Saint Francis Hospital, Thomas Health offers a range of patient focused service lines creating value for patients, physicians and payers through committed healthcare professionals delivering a compassionate exceptional patient experience, superior clinical outcomes and fiscal stewardship to enhance the health and wellness of the communities it serves.

However, like many hospital systems throughout the US, Thomas Health has been experiencing significant financial challenges, including: (i) an ongoing decrease in commercially-insured patients; (ii) Medicaid, Medicare and Public Employees Insurance Agency (PEIA) continuing to reimburse at levels below what it costs hospitals to provide such services; (iii) many patients being unable to afford their deductibles; and (iv) opioid/substance use disorder treatment costs being significant and often exceeding corresponding reimbursement.

Thomas Health senior management have been publicly discussing these challenges for several years and have made significant changes within the organisation that have saved the health system millions of dollars. For example, Thomas Health has merged duplicative services between Thomas Memorial and Saint Francis Hospital, consolidated both IT systems to an integrated platform, and built more affordable care clinics for non-emergent patients.

Going forward, Thomas Health expects the Chapter 11 process to strengthen its ability to meet the new healthcare payment realities and ensure its future.

News: Thomas Health board of directors vote to seek Chapter 11 protection

Insight Partners buys Armis in $1.1bn global IoT security deal

BY Fraser Tennant

In a move designed to address a global Internet of Things (IoT) security need, cyber security firm Armis has been acquired by venture capital and private equity specialists Insight Partners in a transaction valued at $1.1bn.

Well-known for its track record of scaling up industry disruptors, the deal to acquire Armis is the largest-ever enterprise IoT security software acquisition and adds more cyber security firms to Insight’s $20bn asset portfolio.

Founded in 2015, Armis enables enterprises to adopt new connected devices without fear of compromise by cyber attack.

“Insight is one of the most sophisticated software investors in the sector, and it is due to the depth of their domain expertise that they really understand the enterprise IoT device challenge we are looking to solve, and the size of the market opportunity,” said Yevgeny Dibrov, co-founder and chief executive of Armis. “By partnering with Insight we have the best of both worlds – operational support and independence, both of which were important in our decision to take on a scaleup partner this early in our company journey.”

Following completion of the transaction, Armis will continue to operate independently and will be fully managed by its two co-founders, Yevgeny Dibrov and chief technology officer (CTO) Nadir Izrael, as well as its executive team, while leveraging the support of Insight’s industry leading business strategy and scaleup division.

“Armis is one of the most ground-breaking enterprise data-centric security solutions that is actively protecting modern businesses today,” added Jeff Horing, managing director at Insight. “Having achieved exponential growth to date, we are proud to be the partner Armis can leverage to help execute their vision of protecting unmanaged devices proliferating every vertical around the world.

“We see the huge problem they are solving,” he continued. “Armis has established themselves as the leader in the enterprise IoT security space, and we believe this team and their technology will continue to transform the way unmanaged devices are secured.”

The deal is expected to close in February and is subject to customary conditions and approvals.

Teddie Wardi, managing director at Insight, concluded: “The Armis platform is powerful at device discovery, classification, and continuous threat assessment. In a world of unmanaged devices, Armis’ technology is a game changer.”

News: Insight Partners to buy cybersecurity firm Armis at $1.1 billion valuation