ExclusiveThe Keter affair: Following IPO failure, Keter lays off 100 workers
The Keter affair: Following IPO failure, Keter lays off 100 workers
When the group's American CEO, Alejandro Pena, was appointed in 2018, his main task was to guide the company to a successful Nasdaq IPO, but ultimately the IPO was canceled and now Keter’s employees are paying the price of Pena's failure
The Keter Plastic company fired nearly 100 employees as part of the ongoing crisis plaguing the company. Calcalist has learned that most of the workers fired are based in Israel, both from the production plants and from the company’s headquarters.
The dismissals come against the background of the failure of the group's American CEO, Alejandro Pena, in leading the company to an IPO. The IPO was supposed to involve the sale of shares of the controlling owners along with the injection of capital into the company's coffers in a total amount of close to $800 million.
The IPO failed after Keter received negative indications from the institutional market in the United States about the value it might receive in the IPO. Keter was hoping for a value of more than $3 billion.
Pena had really no other choice but to postpone the IPO and he made that decision a year ago, even before the economic crisis that is now plaguing the world. At first it seemed that the offering would merely be postponed, however the indications from the market did not improve and in practice the offering was canceled.
Keter had been preparing for the IPO for two years and for this purpose the company hired the services of the investment banks JP Morgan, Goldman Sachs, Bank of America and Jefferies. Pena, who was appointed to the position in February 2018, replaced Jonathan Kolodny, who held the position for a year and a half after the company was acquired by BC Partners. When Pena was appointed to the position, the main task assigned to him by the owners was to bring the company to a successful IPO on Nasdaq.
Now the employees are paying the price of Pena's failure. About 100 Keter employees were fired in recent weeks, as part of efficiency measures that also included reducing expenses across the company. The dismissal of the workers came after a long and intense negotiation with the National Histadrut and the chairman of the company's workers' committee, Petar Shahada. During the negotiations, the National Histadrut, which represents about 1,500 of the company's employees, agreed on a series of efficiency and cost cutting actions in order to bring about a reduction in the number of layoffs.
The latest data published by Keter, as part of the prospectus, presented the company's results for the third quarter of 2021. According to the data, while Keter's revenue increased by more than 20% to 375 million euros, losses continued to grow, and the company recorded losses of 35.3 million euros, compared to losses of 17.8 million euros in the corresponding quarter in 2020.
In 2016, the Canadian BC Fund and its partner PSP (The Public Sector Pension) purchased 80% of Keter's shares, and the Segol family - the company's founder - was left with a 20% holding. The fund paid the Segol family $1.4 billion, in a deal that valued the company at $1.7 billion. The purchase was made through a financial debt that Keter took on, amounting to hundreds of millions of dollars. In addition, after the transaction was completed, Keter purchased two large companies for $500 million, which brought the company's debt to $1 billion.
At the same time, Keter is faced with the need to refinance the company's debt. Over the next month, a year before the expiration date of the company's leveraged loans in October 2023, the fund must present solutions to finance the repayment of the debt. The fund faces the possibility of extending the terms of the debt or financing through private credit funds, but the economic crisis and high interest rates may make it difficult to recycle the debt.
These streamlining moves carried out by Keter Plastic are taking place against the background of a crisis affecting the global industry, in particular that which relies on the production of consumer goods. One of the issues weighing on the company is the increase in oil prices around the world, which makes the raw materials the group uses very expensive, and is expected to continue to weigh on its results in the coming quarters.
The biggest loser from the cancellation of the IPO is the CEO Pena, who went ‘all in’ with the move. The owner, BC Partners, was also disappointed, as it expected to use the IPO funds to realize part of its investment in the company and reduce part of the debt.
Keter responded as follows: “Considering the increasingly challenging environment across global markets, Keter is taking responsible measures that will ensure financial health and continued growth of the company. Keter will do everything possible to find job opportunities for those being impacted.”