BY Fraser Tennant
In an attempt to reduce its approximately $1.5bn debt and position itself for long-term growth, US educational technology company Skillsoft and a number of its affiliates has filed for Chapter 11 bankruptcy.
The voluntary, pre-packaged Chapter 11 cases have been filed in order for Skillsoft to implement a restructuring support agreement (RSA) with many of its lenders – an agreement which is expected to result in a reduction of the company’s balance sheet to $410m from approximately $2bn.
Furthermore, the RSA is expected to provide Skillsoft with significant additional liquidity – while minimising operational disruptions – by ensuring all holders of general unsecured claims, including vendors, suppliers and other trade creditors, are paid in full. Additionally, there are no planned changes to Skillsoft’s leadership team or organisational structure as a result of the restructuring.
“This agreement marks an important step forward in significantly strengthening Skillsoft’s capital structure and positioning the company for long-term success,” said John Frederick, chief administrative officer at Skillsoft. “This is an exciting time for digital learning, and Skillsoft provides best-in-class learning solutions to thousands of customers around the world, including 65 percent of companies in the Fortune 500.”
Indeed, Skillsoft has stated that it remains focused on providing its customers with state-of-the-art corporate learning solutions, best-in-class performance support resources, as well as live events.
“While our core business remains strong, with attractive profitability and cash flow characteristics, our debt levels are too high,” added Mr Frederick. “We need to invest further and that requires our debt levels to come down to free up cash to further enhance our offerings. We look forward to benefitting from a stronger balance sheet and enhanced financial flexibility.“
In conjunction with the court-supervised process, Skillsoft has received a commitment for $60m in debtor-in-possession (DIP) financing from some of its first lien lenders. This financing, together with cash generated from ongoing operations, is expected to provide ample liquidity to support Skillsoft’s operations during the restructuring process.
“We appreciate the broad support of our lenders, who will become the new owners of the Company and recognise the inherent value in the Skillsoft brand,” concluded Mr Frederick. “We also thank the entire Skillsoft team for their ongoing hard work and commitment to our company and our customers and are grateful to our vendors and business partners for their continued support.”
News: E-learning company Skillsoft files for Chapter 11 bankruptcy