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Tackling Business & Environmental Risk Challenges in the Covid-19 World” – Langan partners with RTM Communications, Inc. to deliver first hand business insights.
On June 4 and 11, Langan and RTM Communications, Inc. (RTM) delivered two webinars to well over 200 attendees who heard first hand insights from business leaders on private and public sector challenges in today’s COVID-19 environment. The programs were co-moderated by Jeff Telego of RTM Communications, Inc. and Rory Johnston of Langan. For the first program, the focus was ‘Keeping Projects Moving’ where our three experts shared their insights about keeping projects moving sharing their expertise and innovation in business, remediation technology, coupled with acquisition, site cleanup and redevelopment strategies. The “Economic and Financial Outlook” was up next for our second program where attendees hear from our expert economic, diligence and public/private financial panel presenting their insights on important trends and opportunities they see on a macro economic and transactional basis.
Keeping Projects Moving
Our presenters for this session included: Jim Schaeffer, Health Safety Security and Environmental M&A Project Manager with BP. Jim is responsible for working across BP’s businesses and functions to develop and implement an effective and sustainable environmental liability risk transfer strategy. Erik Zitek, Director of Investments at Viridian whose responsibilities include acquisition due diligence, market and financial analysis, performance monitoring and reporting and disposition coordination and; John Simon, Editor-In- Chief of the Remediation Journal who has served as editor-in-chief since 1996, and is considered a thought leader in the remediation industry.
The panel of experts for the June 4th presentation, consisted of James Schaeffer, BP, HSSE M&A Program Manager, Eric Zitek, Director of Investments at Viridian Partners and John Simon, Editor in Chief of the Remediation Journal, ably moderated by Dean Jeffery (Jeff) Telego of RTM Communications, Inc. and Rory Johnston of Langan. Mimi Raygorodetsky of Langan also assisted with moderating the questions asked by attendees.
Jeff Telego set the stage acknowledging the short and potential long- term effects of COVID-19 on the business world and uncertainties with predictions on economic recovery. Mr. Telego acknowledged the fact that, regardless of which sectors recover first, environmental risks can and do impact transactions and the fundamentals of good diligence, technical and regulatory expertise to assess remedial alternatives and well-structured deals remain essential to bracketing and managing risk.
James Schaeffer, spoke of organization changes at BP, the impacts of decrease in oil prices and BP’s ambitions to become a greener company. In February of this year, BP CEO Bernard Looney announced that BP would become a net zero company by 2050 or sooner. Mr. Shaeffer said that operating assets will continue to be sold and there will be ongoing opportunities to support transactions and environmental remediation at BP.
Erik Ziteck’s firm, Viridian, does not shy away from environmental risks. When Viridian enters into a deal, they typically assume environmental cleanup. He reported that it has been challenging for them to complete entitlements due to agencies shutting down. When they look ahead, they are expecting a U shaped recovery if examples from China, South Korea and Taiwan are comparable. There is still active capital, it’s just not as aggressive as pre-COVID and so far they have not seen distressed assets hitting the market.
The primary focus by Viridan is reportedly the redevelopment of brownfield properties in core industrial markets where fundamentals remain strong. To date they have seen occupancy and rent collection remain stable and vacancy rates and tenant demand for space at pre-Covid levels. The biggest challenge will be finding property to service the demand for e-commerce with increases in inventories to generate additional 400 million SF of industrial demand nationwide over the next 3 years.
John Simon reported that robust regulatory programs have continued to drive environmental work in many states. He provided a spotlight on some interesting technologies used for data collection as well as use of drones for monitoring workplace density and infrared cleaning options to address COVID-19 transmission concerns.
Economic and Financial Outlook
Our speakers for this session included: Barry Knapp who is a Managing Partner of Ironsides Macroeconomics, LLC. Barry provides macroeconomic and public policy strategy for institutional and wealth advisors, banks and corporations among others. Eric Rothenberg who is a senior partner at O’Melveny & Myers LLP and leads the firm’s environmental practice. Matt Ward who is a Co-Founder and CEO of Sustainable Strategies D.C. and is a recognized leader in community revitalization, economic and infrastructure development, sustainability and green economy projects.
Jeff Telego provided opening comments highlighting the conflicting and diverse perspectives that characterize the current business and economic climate. Jeff concluded that the effective management of Covid -19 will ultimately be determined by diligent risk management of the virus using reliable testing,,, contact tracing, effective treatments, and efficacious vaccines. . In the era of Covid 19, environmental risks continues to be managed with bracketing the exposures and risk and by rigorous due diligence and innovative remedial technologies in conjunction with employing well-structured deal techniques.
Barry Knapp’s presentation was entitled, ‘Schumpeter’s Gale: It’s Never Different This Time’. Barry expounded on the basics of this concept with a generally optimistic view that in response to the pandemic, new markets and new services will prompt growth. Barry pointed out that this has already been seen in the technology sector. He also cited anticipated changes in the future supply chain as companies will look to have independent operations that do not rely on global interaction. Regarding impacts to specific markets, he pointed to likely accelerated decreasing sales at brick and mortar retail businesses as consumers rely more on internet retail.
Barry also predicted that healthcare, housing and education will likely see increased productivity and growth in response to market pressures.
Following Barry Knapp was Eric Rothenberg who presented his insights on role of private equity (PE), types of transactions and the key firms driving the PE market.and the status of the capital markets post covid-19. His presentation was entitled, ‘Covid-19 and Environmental Risk Affecting Corporate Transactions and Assets in Capital Markets’.
Eric Rothenberg articulated the types of transaction formats currently being deployed by Private equity firms that include direct loan to own, hybrid investments, PIPE investment, Chapter 11 363 sales and prepaks. He also identified some of more substantial players being Blackstone Group, KKR, Carlyle Group. Inc., Silver Lake and Apollo among others.
Eric further identified how Covid 19 reshaped the M&A acquisition of distressed assets or divestiture of operating assets and surplus properties. He focused on which industries were involved or would be such as Ecommerce, utilities, health care and energy post Covid. Until now M&A activity has been limited. He also discussed a new class of public and private assets coming under PE ownership, that being more contaminated assets with a demand for warehouses and intermodal, logistics and e-commerce cell towers and re-purposing of office and retail space post-Covid.
Matt Ward rounded out the presentations with a look at ‘Reinvestment & Resilience in a Post-COVID America’. Matt’s presentation addressed the challenges in American communities ranging from the practical realities of conducting business virtually, viability challenges for small business, retail, hospitality, and many other key sectors, state and local government fiscal stress, fundamental questions about equity and inclusion and underinvestment in infrastructure. In the face of these challenges, however, Matt pointed out that there are numerous opportunities including: the CARES Act and recent congressional packages, brownfield and land revitalization resources, Opportunity Zones, infrastructure packages and innovation and entrepreneurship. Matt concluded by recommending that communities develop a “Resource Roadmap” and that he is hopeful that there will be infrastructure investment that drives opportunity for smart growth coupled with renewed focus on green energy, climate resilience, equity and inclusion.
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