Skillsoft Corporation (“Skillsoft” or the “Company”), a global leader in corporate learning, announced that it has entered into a Restructuring Support Agreement (“RSA”) with an overwhelming majority of its first and second lien lenders. The RSA is expected to result in a comprehensive de-levering of the Company’s balance sheet by reducing the Company’s existing first lien and second lien debt to $410 million from approximately $2.0 billion, with total debt (including working capital financing) aggregating $585 million, lowering the Company’s annual cash interest by approximately $100 million (the “Restructuring”).
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As of the date of this release, holders representing approximately 81% in value of the Company’s first lien debt and 84% in value of the Company’s second lien debt have executed the RSA, indicating their commitment to support the Restructuring. The Restructuring is expected to provide the Company with significant additional liquidity and a right-sized pro-forma capital structure, while minimizing operational disruptions by ensuring all holders of general unsecured claims, including the Company’s vendors, suppliers, and other trade creditors, will be paid in full. Additionally, it is expected that no employees will be affected as a direct result of the Restructuring, ensuring that Skillsoft customers continue to be well-served.
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The RSA provides, among other things, that:
- Holders of the Company’s first lien debt will receive their pro rata share of approximately $410 million in takeback first lien debt and 96% of the equity in the reorganized company;
- Holders of the Company’s second lien debt will receive their pro rata share of approximately 4% of the equity in the reorganized company, as well as warrants that will provide them with the opportunity to purchase up to 15% of the equity in the reorganized company at various price thresholds based on first lien debt holders achieving certain recovery levels; and
- Holders of general unsecured claims, including vendors, suppliers and other trade creditors, will receive payment in full in the ordinary course of business.
John Frederick, Skillsoft’s Chief Administrative Officer, said, “Today’s announcement marks an important step forward in significantly strengthening Skillsoft’s capital structure and positioning the Company for long-term success. 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. While our core business remains strong, with attractive profitability and cash flow characteristics, our debt levels are too high. 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 as we continue investing in new products, solutions and content to drive value for our customers and growth in the business. We appreciate the broad support of our lenders, who will become the new owners of the Company and recognize the inherent value in the Skillsoft brand. 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.”
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