Norton Rose Fulbright, Gowlings, Cassels also legal counsel to M&A, investment deals this week
Deal: Iconic Red Lobster dining chain files for Chapter 11 bankruptcy
Value: Undisclosed
Blakes, Fasken, and Torys are serving as Canadian legal counsel in the iconic seafood dining chain, Red Lobster, in its filing of Chapter 11 bankruptcy. Also in this week’s deals roundup are Norton Rose Fulbright, Gowlings, and Cassels as legal advisors to M&A and investment deals in the mining and architectural products sectors.
Red Lobster, the iconic seafood dining chain that popularized popcorn shrimp and “Ultimate Endless Shrimp”, has filed for Chapter 11 bankruptcy protection days after closing dozens of restaurants under the chain.
The US-based seafood restaurant operator has over 551 restaurants in the US and 27 in Canada. The company also has 27 franchised locations in Mexico, Japan, Ecuador, and Thailand.
Blake, Cassels & Graydon LLP is serving as Canadian legal counsel to Red Lobster, Fasken Martineau DuMoulin LLP as legal counsel to FTI, the proposed information officer in Canada, and Torys LLP as advisor to Fortress Credit, the company leading the lending syndicate that will provide additional capital to fund the insolvency proceedings.
Red Lobster CEO Jonathan Tibus said, “This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth.”
The bankruptcy follows two decades of competition and financial missteps. Aaron Allen, of Aaron Allen & Associates, noted Red Lobster's repeated failures with promotions like the "Ultimate Endless Shrimp" and "Endless Crab," which led to significant losses. The chain's annual guest counts fell 30 percent from 2019, with a $103.46 million (US$76 million) loss in 2023.
In the court filing, Red Lobster disclosed that it has more than 100,000 creditors and estimated assets and liabilities between US$1 billion and US$10 billion.
Standard Lithium Ltd., a Vancouver-based near-commercial lithium development company, closed a partnership with Equinor ASA, a multinational renewable energy firm, to accelerate the development of Standard Lithium’s sustainable lithium projects in Arkansas and Texas.
Cassels, Brock and Blackwell LLP and Skadden, Arps, Slate, Meagher & Flom LLP served as Canadian and US legal counsel, respectively, to Standard Lithium, with Citi as financial advisor. Hogan Lovells represented Equinor.
Valued at approximately $217.6 million (US$160 million), the deal includes Equinor’s acquisition of a 45 percent stake in two Standard Lithium subsidiaries for an initial $40.8 million (US$30 million) cash payment and commitments to invest an additional $$177.6 million (US$130 million), contingent on positive Final Investment Decisions by both parties.
The investment covers $81.6 million (US$60 million) in work programs, including a $44.9 million (U$33 million) carry for Standard Lithium and $36.7 million (US$27 million) for Equinor’s share at the Southwest Arkansas Project (SWA) and East Texas properties (ETX). Additionally, Equinor will fund the first $54.4 million (US$40 million) of development costs at SWA and $27.2 million (US$20 million) in exploration at ETX, with further expenditures shared pro-rata. Standard Lithium retains 55% ownership and operatorship of the projects.
“This partnership with Equinor is a major accomplishment for Standard Lithium,” said Standard Lithium CEO Robert Mintak. “Equinor’s culture and values align with ours in using innovation, integrity and responsible development to enable the global energy transition. With this partnership, we have the opportunity to accelerate our progress and carve out a significant role in shaping the future of sustainably produced lithium.”
Equinor senior vice president for New Business and Investments in Technology, Digital and Innovation Morten Halleraker said, “With Standard Lithium as operator and by building on Equinor's core competencies such as sub-surface and project execution capabilities, we believe that more sustainably produced lithium has growth potential and will be an enabler for the energy transition.”
The Gendreau family, Canadian owners of Garaga Inc. (Garaga), a North American pioneer in the manufacture of garage doors, has acquired Novatech Group Inc. (Novatech), a Quebec-based provider of doors and glass.
Novatech has 16 plants and distribution centers in Canada and the United States, as well as an innovation center for research and development of new products since 2009.
Norton Rose Fulbright is serving as legal counsel to the Gendreau family while Gowling WLG (Canada) LLP is acting as legal advisor to Novatech,. KPMG LLP is acting as the financial advisor.
Garaga co-president Maxime Gendreau said, “We are now privileged to be the owners of two organizations such as Garaga Inc. and Novatech Group Inc. that are firmly established in their North American markets. It is important to specify that both organizations, Garaga, the company founded by our father Michel Gendreau, and Novatech Group will continue to operate completely autonomously.”
Novatech president Harold Savard said, “This major transaction between the Gendreau family and Novatech's founder, Raymond Ouellette, ensures the continuity of Novatech's Québec ownership, while allowing for a natural transition of ownership for the organization.”
The deal is expected to close on May 27, 2024, subject to certain closing conditions.
