Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our California newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (June 10, 2020, 1:38 PM EDT ) Canadian private equity firm Onex has agreed to plug $400 million into live event operator Emerald Holding to fortify the company's financial position in light of the coronavirus pandemic, in a deal steered by Freshfields, Fried Frank and Latham & Watkins.
The transaction sees Onex Corp. providing Emerald Holding Inc. with $400 million by way of a private investment in public equity, or PIPE, deal, according to a statement Wednesday. Onex is the controlling stockholder of Emerald, which is headquartered in San Juan Capistrano, California. The company organizes and operates business-to-business trade shows and other live events, including in sectors like sports, technology, jewelry, construction. The company also offers marketing services for the events, including through digital media and print.
Brian Field, interim president and CEO of Emerald, said in the news release that "we are extremely pleased to expand our relationship with Onex as we position our business for recovery once the impact of COVID-19 is behind us."
"We have continued confidence in our strategic plan and the long-term prospects of our marketplaces," Field said. "The capital we are raising positions us to build on the strength of our brands and accelerate new growth opportunities we expect will arise during these uncertain times."
The proposed issuance of preferred stock features multiple components. Onex will acquire $263.5 million of preferred stock in an initial private placement, while also backstopping a rights offering of $136.5 million of the same series of preferred stock to Emerald's other common stockholders. Emerald anticipates using proceeds from the deal to pay off outstanding debt under its credit facility, and will also put some of the money toward general corporate purposes, including potential acquisition opportunities.
"We believe Emerald has the platform, strategy and management team in place to deliver strong performance through future periods of economic recovery and create meaningful long-term stockholder value," said Kosty Gilis, managing director at Onex and chairman of the board of Emerald. "With this investment, Emerald's enhanced liquidity and strong balance sheet will position the company to pursue many attractive opportunities that will arise in the coming years."
The initial purchase by Onex is expected to close on or around July 9, and the second portion of the agreement is expected to be completed during the third quarter of this year. The transaction, which has been approved by a special committee of the Emerald board of directors and the board of directors itself, are not subject to any stockholder approvals. As a result of the PIPE deal, Onex's ownership of Emerald is expected to fall between 65.9% and 86.8%.
PIPE deals have become a hot commodity in the age of coronavirus, with many companies tapping into the PIPE market to raise capital during a time of intense economic difficulty. Although their popularity may wane once the pandemic is truly in the rearview mirror, experts say PIPE deals will always exist as a potentially attractive transaction type for clients seeking increased liquidity.
Freshfields Bruckhaus Deringer LLP and Fried Frank Harris Shriver & Jacobson LLP advised Emerald Holding.
The Freshfields team includes corporate partners Ethan Klingsberg and Paul Tiger; corporate counsel Andrea Basham; corporate associates Vinita Sithapathy and Chase Lax; tax partner Claude Stansbury; and litigation partner Meredith Kotler.
The Fried Frank team includes partners Daniel J. Bursky, David L. Shaw, Philip Richter, and Lee T. Barnum.
Latham & Watkins LLP advised Onex, with a corporate deal team led by partners Paul Sheridan and Bradley Faris, with associates Daniel Breslin and Samir Patel. Partner Brandon Bortner advised on capital markets matters, and partner Lisa Watts advised on tax matters.
--Editing by Orlando Lorenzo.
Update: This story has been updated to include additional counsel information.
For a reprint of this article, please contact reprints@law360.com.
