58.com to be taken private in $8.7bn deal

BY Richard Summerfield

A consortium of investors backed by private equity firms Warburg Pincus and General Atlantic have agreed to acquire Chinese online classifieds company 58.com in a deal worth $8.7bn.

The deal has been unanimously approved by the company’s board and is expected to close in the second half of 2020.

The take-private consortium includes Warburg Pincus Asia LLC, General Atlantic Singapore Fund Pte Ltd, Ocean Link Partners Ltd, 58.com chief executive officer Jinbo Yao and Internet Opportunity Fund LP, an entity controlled by Yao, which has about 42 percent of the voting power in 58.com, the Chinese equivalent of  Craigslist.

The consortium plans to fund the merger through a combination of cash contributions, rollover equity contributions from certain shareholders and $3.5bn in term loans from Shanghai Pudong Development Bank Co, Ltd.

According to a statement announcing the deal, 58.com shareholders will get $56 in cash for each American depositary share, a premium of nearly 20 percent from when the company got the first take-private proposal in April.

The deal would make 58.com the latest in a recent string of Chinese companies to delist from New York and comes just days after online car information provider Bitauto announced it had entered into a similar deal. Bitauto agreed to be taken by private by an investor group backed by gaming and social media firm Tencent Holdings Ltd for $1.1bn in cash.

Chinese companies have been pulling out of the US markets at the fastest pace since 2015 this year. Prior to the announcement of 58.com’s sale, US-listed Chinese companies have announced four go-private deals with a combined value of $8.1bn including debt, according to Bloomberg.

Interest in Chinese take-private deals has increased as Sino-US tensions have risen in recent years. Many companies have been forced to consider the merits of maintaining a New York listing rather than relocating to Shanghai or Hong Kong.

News: China’s 58.com to go private in $8.7 billion deal

Online learning company Skillsoft files for Chapter 11

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

Road freight merger creates “European industry champion”

BY Fraser Tennant

In a market valued at €400bn, Europe's two largest digital freight forwarders – road transport digitalisation specialist sennder and freight tech company Everoad – are to merge in a deal aimed at building the largest digital road freight platform on the continent.

Once the merger is complete, the new company – to be known as ‘Everoad by sennder’ – will have offices across six countries and lead the way in digital logistics and transportation completing over 35,000 loads per month. Its stated aim is to achieve revenues of €1bn by 2024.

To reach this target, the two freight logistics specialists will pool their technology and knowhow to optimise all the stages of the supply chain. Their digital solution – aimed at both carriers and shippers – reduces inefficiencies in the shipping process, meaning both reduced costs for shippers and increased revenue for carriers.

“With Everoad, we share a vision, DNA and common goals,” said David Nothacker, chief executive and co-founder of sennder. “In the midst of this international crisis caused by COVID-19, road freight has demonstrated its inimitable, strategic role in transporting essential goods. It now makes more sense than ever to join forces and integrate Everoad into the sennder group. In that way, we can jointly invest resources and knowhow to tackle the new challenges and opportunities emerging out of the crisis.”

Since 2015, Berlin-based sennder has strived to revolutionise the world of freight transport in Europe. By merging with its French counterpart Everoad they will further expand their geographic growth journey with local presences across all major logistics and transport hubs.

“Our objective was the same as sennder’s: to create a European industry champion within the freight forwarding and logistics industry,” said Maxime Legardez, chief executive and founder of Everoad. “By merging , we achieved this target and can also contribute to reducing the environmental impact of the industry.” Indeed, the new company sees itself as having a strategic role in reducing carbon emissions in the sector, which currently account for 6 percent of the European Union’s total CO2 emissions.

Mr Legardez concluded: “By becoming Everoad by sennder, we will share our expertise and experience acquired over more than four years of a pan-European vision.”

News: German freight tech start-up Sennder merges with France's Everoad

Commercial bankruptcy filings surge

BY Richard Summerfield

Commercial bankruptcy filings in the US increased by 48 percent in May from earlier in the year, according to the American Bankruptcy Institute (ABI).

Chapter 11 filings rose 28 percent in May from April, the ABI said, citing data from Epiq Systems. May saw a number of notable filings, including major retail chains such as J.C. Penney and Neiman Marcus.

“Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of Chapter 11s due to the economic crisis brought about by the COVID-19 pandemic,” said Amy Quackenboss, executive director of the ABI. “The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis. As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”

May’s commercial Chapter 11 filings represented a 29 percent increase from the 562 filings in April 2020. Total commercial filings were up 12 percent over the April 2020 commercial filing total of 2293. Total bankruptcy filings in May represented a 4 percent increase over the 38,444 total filings recorded the previous month. Total non-commercial filings for May represented a 3 percent increase from the April 2020 non-commercial filing total of 36,151.

The average nationwide per capita bankruptcy filing rate in May was 1.98 (total filings per 1000 per population), a decrease from the 2.09 filing rate during the first four months of the year. Average total filings per day in May 2020 were 1998, a 36 percent decrease from the 3130 total daily filings in May 2019.

There were 39,969 total bankruptcy filings in May, down 42 percent from the 68,860 total filings in May 2019. Total consumer filings decreased 43 percent in May, as the 37,391 filings fell from the 65,302 consumer filings registered in May 2019.

News: May Commercial Chapter 11s Increase 48 Percent over Last Year, Total Filings Down 42 Percent

DOJ releases revised compliance guidance

BY Richard Summerfield

This week the US Department of Justice (DOJ) issued a series of revisions to its ‘Evaluation of Corporate Compliance Programs’ which clarifies the new factors prosecutors may consider in the areas of risk management, policies and procedures, training and communications, mergers and acquisitions, and more in their evaluation of corporate compliance programmes.

Since the department first released guidance on how it evaluates corporate compliance programmes in 2017, there have been several revisions. Though the latest version leaves much of the substance of earlier versions unchanged, the most recent updates are in keeping with the agency’s efforts to improve its policies and provide transparency.

“The revised guidance on the Evaluation of Corporate Compliance Programs reflects additions based on our own experience and important feedback from the business and compliance communities,” said Brian Benczkowski, assistant attorney general of the DOJ’s Criminal Division, in a statement. “Although much of the substance of the prior version remains unchanged, the updates we have made are in keeping with our continued efforts as prosecutors to improve our own policies and practices to ensure transparency and the effective and consistent enforcement of our laws”.

One of the most telling changes has been in the section of the guidance concerning compliance programme structure, in which new language has been added to reflect how the Criminal Division assesses a company’s risk profile and offers solutions to reduce its risks. The new language states prosecutors will make a “reasonable, individualised determination in each case that considers various factors including, but not limited to, the company’s size, industry, geographic footprint, regulatory landscape, and other factors, both internal and external to the company’s operations, that might impact its compliance program”.

There have also been notable revisions to the language requiring prosecutors to ask companies whether their compliance programme is “adequately resourced and empowered to function” effectively. In previous versions of the guidance, prosecutors were encouraged to ask if the compliance programme has been “implemented effectively”.

Furthermore, the revisions note that prosecutors will evaluate compliance programmes at the time a potential offence occurred and when a decision is made about bringing charges. This will enable them to track the steps taken by companies to prevent problems from reoccurring.

News: DOJ revises its Corporate Compliance Guidance