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No-deal Brexit could hit food supplies

A no-deal Brexit could affect food supplies and see traders bypass Great Britain, the ferry firm Stena Line has warned.

There is “very little readiness” at ports and “anxiety is high”, said Ian Hampton senior executive at the global ferry operator.

Stena is the largest ferry operator in the Irish sea and owns three UK ports.

The government said it had proposed an ambitious future relationship with the EU to keep trade flowing.

Mr Hampton said there was a possibility Stena Line would reduce services to and from the UK as a result of Brexit.

“We can’t plan on the basis of what we don’t know, so we’re very anxious about the outcome,” he told BBC Radio 4’s Today Programme.

He warned traders could stop using Great Britain to get from Ireland and Northern Ireland to the rest of the EU, and instead sail direct to the continent.

A no-deal Brexit that created friction on the Northern Ireland border, or delays if extra checks were put in place between Great Britain and Northern Ireland to implement what’s become known as a Brexit backstop, could have a significant impact on trade flows, he said.

‘Huge concerns’

Asked if added friction at borders could result in fewer Stena Line sailings to and from UK ports, he said that while the firm did not want to move routes “this could be one of the implications”.

He called for clarity from the government about what trade declarations would be necessary in the event of a no-deal Brexit. Without it, he said, delays at ports could affect whether food got to supermarket shelves on time.

Mr Hampton, chief people and communications officer at Stena Line, was also worried about whether a new computer system to handle customs declarations – known as CDS – or its predecessor, could cope with a sharp increase in volumes following a no-deal Brexit.

“We’re concerned about that,” he said. “I’m not sure it can. This is a system that was not written for the purpose we’re now asking of it and I think that would [create] huge concerns.”

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Stena operates three UK ports, Holyhead, Fishguard and Cairnryan, and carries more than seven million passengers and two million units of freight to and from the UK each year.

A government spokesman said it was engaging with ports, and senior officials had visited those owned by Stena Line.

“It is crucial to keep trade flowing when we leave the EU,” the spokesman said.

“That is why we are proposing a pragmatic and ambitious future economic relationship with the EU, and we remain committed to reaching agreement on the Withdrawal Agreement and future framework this autumn.”

 

Read More – www.bbc.co.uk

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$3.9B Move In The Public Markets

At the start of this month, KKR officially converted from a partnership to a corporation. It was the culmination of a gradual, decades-long shift that’s seen the firm become more and more interested in the public markets, in contrast to its traditionally private-markets-focused PE peers.

KKR’s penchant for exiting investments via IPO is one indication of this philosophy. And its half-decade as a backer of Gardner Denver—a period that began five years ago today, on July 30, 2013—is a prime example.

In this particular saga, the firm’s connection with the stock market began with a search for targets. Gardner Denver, an industrial manufacturer focused on flow-control products for an array of industries, had been publicly traded on the NYSE for 70 years when KKR purchased all its outstanding shares in a take-private buyout valued at $3.9 billion, including the assumption of debt. KKR brought in new management as part of the deal, hiring industry veteran Timothy Sullivan as CEO and president, and appointing Michael Larsen as CFO.

The next four years brought conflicting financial signals for Gardner Denver, with a decline in energy prices wreaking havoc across the industry. The company managed to grow its EBITDA margins steadily under KKR ownership, but revenue declined by some 27% between 2014 and 2016. And something had soon become clear: The debt that KKR had piled onto the company’s existing load in order to execute its buyout was proving problematic. A return to the public markets beckoned.

The company still listed nearly $2.8 billion in total obligations as of March 31, 2017, per an SEC filing. Among a list of other risks, Gardner Denver claimed that it “may not be able to generate sufficient cash to service our indebtedness.”

That may have played a role in the lukewarm response to the company’s roadshow. After initially seeking a price of between $23 and $26 per share for its offering of 41.3 million shares, Gardner Denver ultimately priced its listing at $20 per share for its May 2017 IPO, raising $826 million at an estimated $3.8 billion valuation. The difference between an original midpoint estimate of $24.50 per share and the ultimate $20 per share pricing amounted to some $186 million—a healthy discount from what the company’s investors had hoped for.

In reality, we should maybe use the singular “investor”: KKR owned a 98.6% pre-IPO stake in Gardner Denver and retained a 75% holding upon the offering’s completion.

The company’s stock price hovered in the low $20s for the next several months. By last autumn, however, it began to tick up—first past $25 per share, then past $30. For KKR, that meant it was time to pull out some profits.

Last November 13, the firm announced plans to offer 22 million shares of Gardner Denver; the company closed trading that day with a market cap of about $5.8 billion. KKR announced a secondary offering of another 26.6 million shares for $31 apiece in May, a sale that was set to generate some $823 million in cash. Combined, those nearly 49 million shares that KKR sold in a six-month span represent about a quarter of Gardner Denver’s outstanding stock.

In terms of the traditional buyout cycle of acquisition to exit, KKR’s deal with Gardner Denver may not have generated the sky-high profits to which the PE industry is accustomed. But by holding onto post-IPO shares and playing the stock market, the firm showed the benefits of its emphasis on both the public and private sides of the economy.

This day in buyout history: Full article