Posts

Kirkland advises Travelodge and AllSaints on restructurings

Kirkland & Ellis is advising Travelodge, the UK’s largest independent hotel brand, on its company voluntary arrangement (CVA), which was approved by creditors on 19 June. The CVA involves Travelodge temporarily reducing rents and moving from quarterly to monthly payments on certain leases. Unlike most CVAs, there are no proposed hotel closures or permanent rent reductions.

The approval of Travelodge’s CVA follows the ground-breaking injunction to restrain a winding-up petition pending Travelodge’s restructuring and forthcoming legislation.

The successful vote will enable Travelodge to navigate the short-term challenges facing the business as a result of the COVID-19 pandemic. The process is now complete, subject to the usual challenge period.

Kirkland is also advising AllSaints, the global contemporary fashion brand, on the restructuring of its store portfolio through parallel CVAs of two English tenant companies. AllSaints successfully obtained recognition in the U.S. and Canada of one of the CVAs, which (if approved by creditors) will compromise the relevant company’s liabilities under leases in the U.S. and Canada. Recognition was obtained under Chapter 15 of the U.S. Bankruptcy Code and the Canadian equivalent (Part IV of the Companies’ Creditors Arrangement Act), on 17 June. If, and when, creditors approve the CVAs, follow-up recognition applications will be made to the U.S. and Canadian courts.

We believe AllSaints’ CVA represents a series of major firsts, including the first U.S. recognition of a landlord CVA, the first Canadian recognition of a CVA, and (if approved by creditors) the first compromise of U.S. and Canadian leases via a CVA.

The Kirkland team for Travelodge was led by restructuring partners Elaine Nolan and Kon Asimacopoulos and litigation partner Richard Boynton. Ian Wormleighton and Dan Butters, of Deloitte LLP, are the CVA supervisors. Tom Smith QC and Henry Phillips, barristers at 3-4 South Square, advised Travelodge on its CVA.

The Kirkland team for AllSaints was led by restructuring partners Elaine Nolan and Lisa Stevens in London, Joshua Sussberg and Neil Herman in New York, and David Seligman in Chicago. Richard Fleming and Mark Firmin, of Alvarez and Marsal, are the CVA nominees.

Deloitte comments on ONS retail sales

In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

Commenting on today’s ONS retail sales figures, Ian Geddes, head of retail at Deloitte, said: “Retail sales continued to struggle in May, despite both values and volumes rising by 11.8% and 12% compared to April. In a month that saw two bank holiday weekends, some easing of outdoor social gatherings, and warmer weather for many, retailers may have been looking for the first green shoots of recovery to make up for lost ground in March and April.

“Overall food sales values were flat, at +0.3% month-on-month, but, whilst grocers may have hoped for stronger food sales in what is traditionally the start of barbecue season, online grocery sales remain strong, up by 21.1% compared to April and now accounting for 11.3% of all food sales. More encouragingly, non-food sales are up month-on-month in both value (+24.2%) and volume (+23.7%) for the first time since lockdown, which, for some, will mark the early signs of ‘normality’ for this time of year. However, 41.5% of non-food sales occurred online in May, up from 15.8% in February 2020 before lockdown.

“A wider disparity between online and in-store sales remains this month in spite of garden centre and hardware store re-openings. Total online sales stood at 33.4% this month, beating April’s record sales, though this is unlikely to have offset sales usually seen in-store over this period. In addition to household goods, purchases have also likely been driven by beauty products and, more notably, clothing items as many consumers continue to work from home, with an increased requirement for video conferencing and a more relaxed ‘work’ wardrobe.

“Looking ahead, as non-essential retailers begin to phase-in store reopening plans, some consumer anxiety will remain. During lockdown, consumers have pivoted to fewer but bigger food shops. Whether this trend will also translate into non-food remains to be seen. For retailers, there are two options: a difficult balancing act to between re-creating a familiar shopping experience whilst implementing and maintaining strict new hygiene practices, or innovating and re-inventing the shopping experience for a post-COVID-19 world. Deloitte data shows that 46% of UK consumers currently feel safe visiting a store, but building on this confidence will be key for drawing more shoppers back to the High Street over the coming months.”

£14.7 billion raised in secondary offerings since the start of the year

Overall secondary offerings have reached £14.7 billion across 135 transactions in the UK for the year to date, according to new analysis from Deloitte. A secondary offering refers to the sale of shares in a listed company occurring after a company’s IPO, with the transaction taking place through either London’s Main Market or AIM.

Prior to the lockdown in the UK, the amount of money raised in January and February 2020 was almost twice that of the same period in 2019 (£3.4 billion vs £1.9 billion), signalling increased business optimism. Despite a drop in March, April and May both saw elevated levels of equity fundraising in London.

Chris Nicholls, Head of Equity and PLC Advisory at Deloitte, said: “The UK market has very much been open for existing listed companies seeking additional equity capital, including those from the retail and hospitality sectors. Typically this has been to strengthen balance sheets and improve liquidity in the wake of the pandemic. I would expect fundraising activity to continue into the rest of the year, albeit with only a modest trickle of IPOs.”

Since 23 March this year, the FTSE 100 and S&P 500 have risen 29.8% and 42.8% respectively, boosted by the gradual reopening of world economies and bold government and central bank stimulus measures. However, volatility levels remain elevated compared to long-term averages with the global VIX Index currently in the region of 24, substantially higher than the 2019 average of approximately 15.

Chris Nicholls concludes: “Whilst volatility has substantially reduced from March levels, any VIX reading above 20 traditionally represents a difficult environment in which to launch IPOs. However, global equity markets are recovering strongly from the unprecedented shock to the economy caused by COVID-19.”

Potential economic impact of the Rugby World Cup

Building on previous studies for the Rugby World Cup (RWC) 2003 in Australia, RWC 2007 in France and an advance study for RWC 2011 in New Zealand, we used our major event economic impact methodology to estimate the potential impact of a future RWC on a set of potential Host Nations.

Our report provided a thorough analysis of the possible economic gains a future RWC could lead to in various Host Nations. It outlined the generic economic benefits to a country of hosting a major event such as this and provided contextual data for the impact associated with other similar international sports events.

Using our tried and testing methodology for assessing the potential impact of major sports events, we estimated the direct and indirect economic impact of a RWC on the major rugby regions by building a model for each country.

For each region (including Western Europe, SANZAR, and for developing rugby nations) we also identified regional factors that could affect the level of economic impact. Our analysis incorporated the possible contribution of a Host Country’s government via taxation.

The report continues to provide important support to Host Unions and Governments when deciding whether to bid for future RWCs.

“Deloitte’s Rugby World Cup economic impact study was excellent. Deloitte have a real insight into major events and showed rigour in assessing the economic impact that the Rugby World Cup has on host nations.~ Robert Brophy, Head of Finance, World Rugby

Mathieu Colas and Hélène Chaplain join Monitor Deloitte France

Both new partners have been at Deloitte for between six months to one and a half years, and after demonstrating their track record externally and internally, they have been promoted to senior partner and admitted into Monitor Deloitte’s ranks. Monitor Deloitte is the strategy consulting brand of Deloitte Consulting, established in 2012 after Deloitte acquired Monitor Group, a boutique US-headquartered strategic consultancy that was founded by among others strategy guru Michael Porter.

Hélène Chaplain is a senior partner in the firm’s Digital Strategy & Innovation practice, and is the leader of Deloitte’s wider Consumer Business industry segment, which spans services to clients in the automotive, consumer goods, retail, transportation and hospitality industries. She previously spent 17 years at Accenture, since 2001 in the role of partner. In her most recent roles, Chaplain served as Accenture France’s industry lead for consumer goods and was head of the firm’s digital consulting arm for clients in the products landscape.

Mathieu Colas is a senior partner in charge of Monitor Deloitte’s automotive and new mobility offerings. He started his career with Deloitte at Deloitte Digital – the Big Four firm’s rapidly growing digital wing – and previously spent four years at Capgemini Invent and over a decade at Oliver Wyman. Colas focuses on topics including (digital) strategy, large-scale transformation, emerging technologies, advanced analytics and digital transformation.

As part of their new roles, both Colas and Chaplain joined Monitor Deloitte’s annual offsite in June. During the three day trip to Biarritz in the south of France, the firm’s leadership walked through the year’s top accomplishments and the ambitions for the current financial year. Meanwhile, consultants were provided the room to network, share experiences and best practices and enjoy the region’s sunny weather and culinary culture.

Last year, Monitor Deloitte France added Olivier Perrin, a former Accenture Strategy partner, to its leadership ranks in Paris.

International Olympic Committee reappoints PwC

Speaking at the 134th session of the International Olympic Committee in Lausanne, chairman of the audit committee Baron Pierre-Olivier Beckers-Vieujant announced the committee’s recommendation to reappoint the Big Four firm.

“It is with complete confidence that the audit committee approved this proposal and recommended it to the executive board, which also approved this reappointment in the March session,” he said.

The 134th session then approved the reappointment by show of hands.

In August 2018, the IOC invited Deloitte, EY, PwC and KPMG to submit their proposals in a closed tendering process, which were then assessed by a selection board.

Baron Beckers-Vieujant said the audit committee decided to only include the Big Four as it believed these firms were the only ones capable of delivering on expectations from a global point of view and in line with the IOC’s reputation.

He added that the key argument in the firm’s favour was PwC’s “complete compliance with IOC’s highest standards in terms of the external auditors’ global independence vis-à -vis the IOC and the entire Olympic movement”.

He highlighted value for money and PwC’s commitment to reduce costs over the six-year term as key reasons supporting the choice – explaining that the Big Four firm had already offered to reduce costs in the first year from 402,000 Swiss francs (£324,800) to 391,000 Swiss francs.

Baron Beckers-Vieujant also noted that, although it is not mandatory, the audit committee requested PwC’s audit team change its leadership, as the IOC was “driven to make sure that from all angles they would maintain the highest level of independence expected by the session and the general public”.

PwC will serve a six-year term as the IOC audit committee wanted to align the appointment with the four-year Olympiad cycle.

Baron Beckers-Vieujant said that “since we are in the middle of one, we would appoint [PwC] for two plus four years if you will, and afterwards reappoint or appoint new [firms] for four-year terms”.

He also noted that under Swiss law the firm has to be reappointed by vote on a yearly basis.

Last week, PwC was appointed auditor for pharmaceutical company Diurnal Group following a formal tender process and, pending shareholder confirmation the November AGM, will audit the company’s accounts for the year ended June 2020.

PwC will succeed KPMG and according to a statement from Diurnal Group, KPMG confirmed that it was not aware of anything “connected with its termination as auditor that it consider should be brought to the attention of the board, creditors or shareholders of the company”.