Terra Firma’s Hands Acquires McDonalds’ Nordic Restaurants

Guy Hands to run businesses with his wife and family.

Guy Hands, chairman of Terra Firma Capital Partners, has acquired all of fast-food chain McDonald’s restaurants in Norway, Finland, Denmark and Sweden. Financial terms of the deal weren’t disclosed, although reports have the sale valued at $420 million.

The deal includes 435 McDonald’s restaurants, of which more than 95% are franchised. According to the terms of the deal, Hands will become the development licensee for the Nordic markets. McDonald’s will transfer its ownership interest in the restaurants, and will grant a license to Hands to develop and operate the restaurants. 

The deal is expected to close around the end of Q1 2017. As part of a turnaround plan announced in 2015, McDonald’s committed to refranchising 4,000 restaurants by the end of 2018 with the long-term goal of becoming 95 percent franchised.

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The deal is somewhat unusual in that it gives control over the restaurants to Hands personally, rather than to his private equity firm Terra Firma. Hands said he plans to run the businesses with his wife and family – his wife Julia owns a chain of British hotels.

“We plan to leverage our industry knowledge and financial expertise, take a rigorous approach to insights and analysis and employ a hands-on approach,” said Hands. 

Related link: Putting Norway’s Wealth into Perspective

Iron Workers Multiemployer Plan Approves Benefit Cuts

The insolvent $85 million pension fund is the first multiemployer plan to reduce benefits for current retirees.

The Iron Workers Local 17 Pension Fund is the first multiemployer plan to approve benefit cuts for current retirees following a participant-wide vote last week.

The cuts will average 20% for participants, and range up to 60% for current retirees. Without the changes, the plan was on a course to become insolvent and relying more on the Pension Benefit Guaranty Corporation, which is facing its own financial difficulties.

The $85 million fund was 32% funded with $263 million in liabilities (current retirees made up 80% of the liabilities). Despite the vote, 52% of the participants will see no cut.

The Iron Workers pension lost significant assets to the dot-com bubble and the financial crisis and is working to balance some of the benefits. 

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One man who retired in 2008 after contributing $167,000 to his pension was receiving $3,500 a month. “So he got all of the money that he put in back out in the first four-and-a-half years,” Teresa Pofok, legal counsel to the pension fund told CIO. These are the types of workers who will see the largest cuts, she continued. About 30 pensioners—making $4,000 and $5,000 a month—will see a benefits reduction of 50% to 60%.

Under the 2014 Kline-Miller Multiemployer Pension Reform Act, the Iron Workers’ fund is the first multiemployer plan approved to reduce benefits by the Treasury Department.

Upon receiving the approval, the fund put it up to vote by pension participants, a choice described as “getting a haircut now or a beheading in the future,” according to the plan’s board chairman.

Out of the 1938 eligible voters, only 16% voted to reject the cut, according to a press release, and the votes cast were two-to-one in favor of approval.

“The trustees appreciate that a majority of the participants understood that the suspension plan, while reducing their pensions now, is a better alternative than letting the pension fund become insolvent,” the fund said in a statement. 

The reductions will take effect February 1, and give the fund a 54.2% chance of staying solvent.

Related:Insolvent Multiemployer Pension fund to Vote to Cut Benefits

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