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Message: <blockquote data-quote="Jaysen" data-source="post: 28315" data-attributes="member: 1">No Suitor for Moss Bros?By [USER=4861]@Lauren2[/USER] The StoryCrew Clothing has sought to back out of its £22.6m acquisition of tailor and formalwear hirer, Moss Bros. The US company agreed to buy the company the day after the coronavirus was declared a pandemic, using a bid vehicle, Brigadier Acquisition Company.However, last Wednesday, Brigadier applied to the City Takeover Panel, an independent body which regulates takeovers and mergers, for permission to scrap the deal. It remains to be seen whether it will be permitted. Moss Bros argue the bid vehicle seeks the grounds to revoke and has stated it will “take all necessary action to make its case” to prevent permission being granted.What It Means For Businesses and Law FirmsBrigadier is believed to be seeking to rely upon a "material adverse change clause" to back out of the deal. In the context of an M&A deal, such clauses give the buyer the right to walk away from the acquisition before its closing, if events occur which are detrimental to the target. Brigadier must prove that the COVID-19 crisis has been of “material significance…in the context of the offer” for it to successfully be retracted. Lawyers commonly include such clauses in private acquisitions to mitigate the risks to the purchaser where an unforeseeable event occurs, rendering the target less attractive and worth less than the proposed acquisition bid.Moss Bros finds themselves in a financially poorer state due to the closure of all of its UK stores. The company is no longer worth the price agreed of 22p per share bid by Crew Clothing, and further plummeted since news of Brigadier attempted withdrawal hit the press. One of the five largest shareholders expressed the view it would be “disgraceful” if coronavirus was used as an excuse to back out of the deal and causing long-term damage to the company’s share price.The effects of the COVID-19 crisis on M&A activity have been mixed. Certain deals, including the proposed Moss Bros acquisition have been cancelled, or delayed. Increased risk to buyers and sellers has led to an overall decline in global deal activity. In early April, Xeroz walked away from a $35 billion acquisition of rival printing company, HP, citing the need to focus on its own business needs during the pandemic, rather than growth. Last week, no merger or acquisition worth more than $1bn was announced anywhere in the world for the first time since 2004 (The Financial Times).Meanwhile, the crisis presents opportunities for those seeking to investing in distressed targets, utilising their current low value to make strategic acquisition which may prove lucrative when times improve. Boohoo has been reported as a potentially buyer for financially distressed retailers, Oasis and Warehouse, allowing the company to further expand its footprint in the women’s fashion sector.Virgin Atlantic’s Bailout PleaBy [USER=4295]@Jiraiya[/USER] The StoryTo bail out or not bail out? That is the question. British airline, Virgin Atlantic, last week sought a £500m commercial loan from the UK government after its sister company Virgin Australia entered into administration, having failed to secure a bailout deal from the Australian government.Richard Branson has provided $250m liquidity to the Virgin Group, which owns a 51% stake in the British airline, with the US carrier Delta Airline holding the remaining 49%. $100m of his personal wealth has been earmarked for the airline, however this cash injection is insufficient to make up for the loss of revenue experienced due to strict travel restrictions and lockdown measures.The UK Chancellor, Rishi Sunak, stated that the government will consider airline bailouts but will only step in as a last resort. HM Treasury were “unimpressed” when Virgin sought a bailout bid, subsequently rejecting it, despite Rolls-Royce, Airbus, Heathrow Airport and Manchester Airport Group sending letters to government highlighting Virgin Atlantic’s vital role in manufacturing supply chains. The government instead urged airlines to consider the Bank of England’s Covid Corporate Finance Facility Scheme to manage their debts.What It Means For Businesses and Law Firms <a href="https://www.thecorporatelawacademy.com/forum/threads/commercial-awareness-update-march-2020.2189/#post-27705" target="_blank">Since our last coverage on the aviation sector</a>, airlines worldwide have been scrambling to secure state aid and other emergency funding sources. With the possibility of UK public funding for Virgin Atlantic proving increasingly unlikely, the airline urgently require private investment, having reportedly contacted more than 100 potential investors. Acquiring stakes in reputable airlines at an undervalued is highly attractive to distressed investors; Deloitte, administrators of Virgin Australia, reported a surge of enquiries into the debt restructuring.Securing commercial loans or a sale of the business are potential options. Several potential buyers for Virgin Atlantic have been identified and a ‘rescue package’ could take several forms. An injection of debt would require repayment by the company at a later date. Equity investment is a further possibility, however Virgin Group (headed up by Branson) would lose its majority shareholding, if new investors entered the business.Likewise, convertible loans are a further fundraising option; investors provide funding at a set interest rate, requiring regular repayments like an ordinary loan. However, once the loan matures, investors can choose to convert the loan into shares or equity, depending upon their assessment of the airline later down the line. Failure to secure further financing will likely result in the UK-based airline experiencing the same fate as its Australian counterpart – entry into administration.</blockquote>

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