Frontier Communications files for Chapter 11

BY Fraser Tennant

In an attempt to reduce its debt by more than $10bn, telecommunications company Frontier Communications, along with its direct and indirect subsidiaries, has filed for Chapter 11 bankruptcy to expedite the implementation of a restructuring plan.

In conjunction with a restructuring agreement (RSA), Frontier has received commitments for $460m in debtor-in-possession (DIP) financing. Following court approval, the company’s liquidity will total over $1.1bn, comprising the DIP financing and more than $700m cash on hand.

This liquidity, combined with cash flow generated by Frontier’s ongoing operations, is expected to be sufficient to meet the company’s operational and restructuring needs.

“We are undertaking a proactive and strategic process with the support of our bondholders to reduce our debt by over $10 bn on an expedited basis,” said Robert Schriesheim, chairman of the finance committee at Frontier. “We are pleased that constructive engagement with our bondholders over many months has resulted in a comprehensive recapitalisation and restructuring. We do not expect to experience any interruption in providing services to our customers. 

“With a recapitalised balance sheet, we will have the financial flexibility to reposition the company and accelerate its transformation by allocating capital resources and adding talent to enhance our service offerings to our customers while optimising value for our stakeholders,” he continued. “Under the RSA, our trade vendors will be paid for goods and services provided both before and after the filing date.”

Under the RSA, bondholders have, subject to certain terms and conditions, agreed to support implementation of a plan that is expected to reduce the company’s debt and provide significant financial flexibility to support continued investment in its long-term growth.

In addition, Frontier intends to proceed with the sale of its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for $1.352bn in cash, subject to certain closing adjustments, on or around 30 April 2020, and will seek court approval to complete the transaction on an expedited basis.

“With the agreement with our bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” added Bernie Han, president and chief executive of Frontier. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers.”

News: Frontier Communications files for bankruptcy protection

Print priorities: LSC Communications files for Chapter 11

BY Fraser Tennant

In a move to strengthen its liquidity and improve its capital structure, multinational commercial printing company LSC Communications, along with most of its US subsidiaries, has voluntarily filed for Chapter 11 bankruptcy.

As part of the restructuring process, Chicago-based LSC has received commitments for $100m in debtor-in-possession (DIP) financing from certain of its revolving lenders, subject to the satisfaction of certain closing conditions, which will allow it to continue to operate and pay vendors in full.

LSC’s subsidiaries in Mexico and Canada are not included in the Chapter 11 proceedings and will continue to operate as normal.

“As one of the country’s largest and most experienced printers with the leading mailing distribution network, we have a strong foundation and world-class team that will continue to work closely with our clients and vendors to achieve our mutual success,” said Thomas J. Quinlan III, chairman, president and chief executive of LSC Communications. “At the same time, the situation related to COVID-19 continues to evolve and impact our people, our communities, our clients and our vendors.”

LSC’s decision to file for Chapter 11 follows a comprehensive evaluation of opportunities to reduce its debt and better position the company to compete and deliver exceptional products and services to its clients.

“Our leadership continues to take the necessary steps to fortify our operations and effectively execute our critical role during this time, while making sure the health and safety of our employees remains our top priority,” continued Mr Quinlan. “Notably, the support we are receiving from our lenders through this process will help us to manage through these unprecedented near-term challenges as well as position LSC for the future.”

Since terminating its merger with Quad Graphics in July 2019, LSC’s proactive and aggressive approach to improving its cost structure and streamlining its manufacturing platform has seen it close eight of its facilities, as well as winning a host of new contracts.

News: LSC Files Chapter 11

Alnylam secures $2bn Blackstone investment

BY Richard Summerfield

Private equity firm Blackstone Group Inc is to invest $2bn in Alnylam Pharmaceuticals through an equity-and-debt deal, the firms announced on Monday.

Under the terms of the deal, Blackstone will acquire $100m in Alnylam stock and pay $1bn for 50 percent of Alnylam’s royalties and commercial milestones for inclisiran. The drugmaker could pick up another $150m from Blackstone Life Sciences for its cardiometabolic programmes vutrisiran and ALN-AGT, as well as a loan worth up to $750m.

“Alnylam is focused on building a top-tier biopharmaceutical company, advancing RNAi therapeutics as a whole new class of medicines with transformative potential for patients around the world,” said John Maraganore, chief executive of Alnylam. “This exciting new relationship with Blackstone brings us much closer to that goal, securing our bridge towards a self-sustainable financial profile that we believe can now be achieved without any need for Alnylam to access the equity markets in the future.”

He continued: “A central component of this strategic relationship is a partial monetization of our royalty for inclisiran. If approved, we believe this therapy holds enormous promise as a potential game-changer in hypercholesterolemia management. We are pleased to retain half of the royalties we receive from Novartis, allowing Alnylam to benefit from inclisiran’s anticipated future success. We couldn’t be more pleased to enter into this highly innovative arrangement with Blackstone, which has shown a significant commitment to Alnylam’s future and alignment with our long-term vision.”

“Blackstone is uniquely positioned to provide customized, one-stop-shop financing solutions at scale while establishing development collaborations with the world’s leading biotech companies,” said Nicholas Galakatos, global head of Blackstone Life Sciences. “Alnylam’s RNAi technology represents one of the most promising and rapidly advancing frontiers in biology and drug development today, and aligns perfectly with our investment strategy.

“Our collaboration with Alnylam provides non-dilutive access to capital to advance important new medicines in development across several disease indications including heart disease, the leading cause of death in the U.S. and globally,” he added.

Alnylam had been in talks with several buyers to sell its royalty rights for its cholesterol therapy inclisiran months before the global COVID-19 outbreak.

News: Alnylam's gene-silencing efforts get $2 billion Blackstone backing

SoFi to acquire Galileo for $1.2bn

BY Richard Summerfield

Despite the scarcity of deals given the COVID-19 outbreak, some M&A activity is still occurring. On Tuesday, non-profit online student lender Social Finance Inc (SoFi) announced it had agreed to acquire payments and banking technology provider Galileo Financial Technologies for $1.2bn in cash and stock, subject to regulatory approval.

The deal will see Salt Lake City-based Galileo continue to operate as an independent subsidiary of SoFi Inc, with current chief executive, Clay Wilkes, remaining in charge of the company.

“SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right,” said Anthony Noto, chief executive of SoFi. “The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation.

He added: “Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation, making those products and services available to both current and future partners. While we march forward on our mission to help people achieve financial independence through our own direct efforts, with Galileo, we can enable a broader ecosystem of companies to join us in helping the world achieve financial independence.”

“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services,” said Mr Wilkes. “These are products that many of our leading fintech clients are asking for. Distributing products through our enterprise class API is the vision behind this combination. I think it’s very powerful.

He continued: “We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”

News: SoFi To Acquire Galileo Financial Technologies

PE giant Lone Star acquires hotel operator Unizo for $1.9bn

BY Fraser Tennant

Following months of negotiations and counter bids, global private equity (PE) firm Lone Star Funds has won the race to acquire Japan-based company Unizo Holdings Co Ltd for $1.9bn.

The transaction will see Lone Star, in tandem with a number of Unizo employees, acquire all 29,618,824 shares tendered in the offer at ¥6000 apiece in cash. The tendered shares – including those of Unizo shareholders Elliott International and Liverpool Limited Partnership – represent 86.55 percent of Unizo’s outstanding shares.

Furthermore, Lone Star plans to acquire the hotel operator’s remaining shares that were not tendered in the offer. Throughout the long open-bidding process, Unizo had expressed a preference for its employees to be involved in the deal, a scheme which allows a group of Unizo employees to own 73 percent of common shares, while Lone Star would hold the remainder.

Principally engaged in the real estate sector, Unizo has two core business divisions: a real estate business and a hotel business. The company owns and leases office buildings located in central areas of Japan and prime locations in large cities in the US, as well as operating several hotels located in prime locations of major cities in Japan.

In a statement, Unizo said that it had rejected a number of bids due to concerns over securing employment. The hotel operator also stated that it had made a rare request to bidders for Unizo employees to be able to control the new owner’s power to sell assets – a request with which Lone Star concurred and which helped seal the deal.

Based in Dallas, Texas, Lone Star invests globally in real estate, equity, credit and other financial assets. Since the establishment of its first fund in 1995, the firm has organised 17 PE funds with aggregate capital commitments totalling over $70bn.

To acquire Unizo, Lone Star had to outpace a number of fellow bidders, including Fortress Investment Group and Blackstone, which made a sweetened bid for Unizo in January 2020 after its initial October 2019 offer was rejected.

News: Lone Star succeeds in $1.9-billion buyout of Japan hotel chain Unizo