Current report filing

Fresh-Start Reporting (Tables)

v3.22.2.2
Fresh-Start Reporting (Tables)
12 Months Ended
Jan. 31, 2022
Fresh-Start Reporting  
Schedule of reconciliation of enterprise value under reorganization adjustment

The following table reconciles the enterprise value per the Disclosure Statement to the fair value of Predecessor (SLH)’s equity, as of the Effective Date (in thousands, except per share amounts):

Enterprise Value (1)

    

$

1,150,000

Plus: Cash

 

92,009

Less: Borrowings under accounts receivable facility

(48,886)

Less: Fair value of debt

(514,950)

Less: Fair value of warrants

 

(11,200)

Implied value of Successor Company common stock

$

666,973

Shares issued upon emergence (Class A and B common stock)

4,000

Per share

$

167

The reconciliation of the Company’s enterprise value to reorganization value as of the Effective Date is as follows (in thousands):

Enterprise Value (1)

    

$

1,150,000

Plus:

 

Cash

92,009

Current liabilities (excluding AR facility and Current maturity of long-term debt)

134,257

Deferred tax liabilities

103,930

Other long-term liabilities

 

7,140

Non-current lease obligations

16,399

Reorganization Value

$

1,503,735

(1) Enterprise value includes the value of warrants that are classified as liability
Schedule of adjustment to assets and liabilities under fresh start adjustment

Reoganization

Fresh Start

    

Predecessor

    

Adjustments

    

Adjustment

    

Successor

ASSETS

 

  

 

  

  

  

Current assets:

 

  

 

  

  

  

Cash and cash equivalents

$

42,341

$

49,668

(1)  

$

$

92,009

Restricted cash

 

35,306

 

(25,000)

(1)  

 

 

10,306

Accounts receivable

 

73,607

 

1,700

(2)  

 

(990)

(10)  

 

74,317

Prepaid expenses and other current assets

 

39,317

 

(300)

(2)  

 

(10,573)

(11)  

 

28,444

Total current assets

 

190,571

 

26,068

 

(11,563)

 

205,076

Property and equipment, net

 

15,523

 

500

(2)  

 

 

16,023

Goodwill

 

1,070,674

 

5,100

(2)  

 

(580,639)

(12)  

 

495,135

Intangible assets, net

 

249,962

 

 

516,124

(13)  

 

766,086

Right of use assets

 

17,454

 

 

367

(14)  

 

17,821

Other assets

 

17,313

 

(3,500)

(2)  

 

(10,219)

(11)  

 

3,594

Total assets

$

1,561,497

$

28,168

$

(85,930)

$

1,503,735

LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY

 

  

 

  

 

  

 

  

Current liabilities:

 

  

 

  

 

  

 

  

Current maturities of long-term debt

$

60,000

$

(57,400)

(3)  

$

$

2,600

Borrowings under accounts receivable facility

 

48,886

 

 

 

48,886

Accounts payable

 

7,851

 

300

(2)  

 

 

8,151

Accrued compensation

 

23,587

 

1,400

(2)  

 

 

24,987

Accrued expenses and other liabilities

 

12,105

 

500

(2)  

 

 

12,605

Lease liabilities

 

1,699

 

3,245

(6)  

 

(175)

(14)  

 

4,769

Deferred revenue

 

196,469

 

2,400

(2)  

 

(115,124)

(15)  

 

83,745

Total current liabilities

 

350,597

 

(49,555)

 

(115,299)

 

185,743

Long-term debt

 

 

517,400

(3)(4)  

 

(5,050)

(17)  

 

512,350

Long term lease liabilities

 

3,732

 

12,442

(6)  

 

225

(14)  

 

16,399

Warrants

 

 

11,200

(6)(8)  

 

 

11,200

Deferred tax liabilities

 

 

30,484

(5)(6)  

 

73,446

(16)  

 

103,930

Deferred revenue - non-current

 

1,783

 

 

(1,128)

(15)  

 

655

Other long-term liabilities

 

2,289

 

3,796

(6)  

 

400

(17)  

 

6,485

Total long-term liabilities

 

7,804

 

575,322

 

67,893

 

651,019

Liabilities subject to compromise

 

4,472,954

 

(4,472,954)

(6)  

 

 

Total liabilities

4,831,355

(3,947,187)

(47,406)

836,762

Shareholders’ (defecit) equity:

 

  

 

  

 

  

 

  

Ordinary shares (Predececcor)

138

(138)

(7)  

Additional paid-in capital (Predecessor)

 

83

 

(83)

(7)  

 

 

Ordinary shares (Successor)

40

(6)(8)  

40

Additional paid-in capital (Successor)

 

 

666,933

(6)(8)  

 

 

666,933

(Accumulated deficit) retained earnings

 

(3,267,346)

 

3,308,603

(9)  

 

(41,257)

(17)  

 

Accumulated other comprehensive loss

 

(2,733)

 

 

2,733

(18)  

 

Total shareholders’ (deficit) equity

 

(3,269,858)

 

3,975,355

 

(38,524)

 

666,973

Total liabilities and shareholders’ (deficit) equity

$

1,561,497

$

28,168

$

(85,930)

$

1,503,735

Schedule of usage of cash under reorganization adjustment

Sources:

    

Release of restriced cash (a)

$

25,000

Additional funding from First Out Term Loan

 

50,000

Reconsolidation of Canadian subsidiary

1,100

Total sources of cash

76,100

Uses:

Exit Facility and DIP Facility rollover financing costs paid upon Effective Date

(5,032)

Professional success fees paid upon Effective Date

 

(21,400)

Total uses of cash

(26,432)

Net increase in cash

$

49,668

(a) A portion of DIP Facility funds from restricted cash was released upon Effective Date
Schedule of term loan facility under reorganization adjustment

Term Loan Facility:

    

Senior Secured First Out Term Loan

$

110,000

Senior Secured Second Out Term Loan

 

410,000

Total Debt - Exit facility (a)

520,000

Less:

Current portion of Long-term debt

(2,600)

Long-term debt, net of current portion

$

517,400

(a) The Exit Credit Facility bore interest at a rate equal to LIBOR plus 7.50% per annum, with a LIBOR floor of 1.00%. The First Out Term Loan is due in December 2024 and the Second Out Term Loan is due April 2025. The Exit Credit Facility contains customary provisions and reporting requirements, including prepayment penalties and a maximum leverage covenant that will be first measured January 31, 2022 and each quarter thereafter. Quarterly
principal repayments of $1.3 million begin for the quarter ended April 30, 2021 and increase to $2.6 million for the quarter ended April 30, 2022 until maturity.
Schedule of disposition of liability under reorganization adjustment

The table below indicates the disposition of liabilities subject to compromise (in thousands):

Liabilities subject to compromise pre-emergence

    

$

4,472,954

Reinstated on the Effective Date:

Lease liabilities (current and non-current)

 

(15,687)

Deferred tax liabilities

(26,107)

Other long-term liabilities

(3,796)

Total liabilities reinstated

(45,590)

Less amounts settled per the Plan of Reorganization

Issuance of new debt

(410,000)

Issuance of warrants

(11,200)

Equity issued at emergence to creditors in settlement of Liabilities Subject to Compromise

(666,973)

Total amounts settled

(1,088,173)

Gain on settlement of Liabilities Subject to Compromise

$

3,339,191

Schedule of cumulative impact of under reorganization adjustment

Gain on settlement of Liabilities subject to compromise

    

$

3,339,191

Provision for income taxes

(4,377)

Professional success fees paid upon Effective Date

 

(21,400)

Exit Facility and DIP Facility rollover financing costs paid upon Effective Date

(5,032)

Cancellation of predecessor shares and additional paid in capital

221

Net impact on Accumulated deficit

$

3,308,603

Schedule of goodwill under fresh start adjustment

(in thousands)

    

Reorganization value of Successor company

    

$

1,503,735

Less: Fair value of Successor company assets

(1,008,600)

Reorganization value of Successor company in excess of asset fair value - Goodwill

$

495,135

Schedule of adjustment to intangible assets under fresh start adjustment

Estimated

Estimated

    

fair value

    

useful life

Developed software/ courseware

$

261,600

3-5 years

Customer contracts/ relationships

279,500

12.4 years

Trademarks and trade names

6,300

9.4 years

Backlog

90,200

4.4 years

Skillsoft trademark

91,500

Indefinite

Publishing rights

35,200

5 years

Capitalized software

1,786

5 years

Total intangible asset upon emergence

766,086

Elimination of historical acquired intangible assets

(249,962)

Fresh-start adjustment to acquired intangibles assets

$

516,124

Schedule of cumulative impact of under fresh start adjustment

Fresh-start adjustment to accounts receivable, net

    

$

(990)

Fresh-start adjustment to prepaid assets and other assets (including long-term)

(20,792)

Fresh-start adjustment to goodwill

(580,639)

Fresh-start adjustment to intangible assets, net

516,124

Fresh-start adjustment to operating lease right-of-use assets and liabilities, net

317

Fresh-start adjustment to deferred revenue (current and non-current)

116,252

Fair value adjustment to debt

5,050

Fair value adjustment to other long-term liabilities

(400)

Total fresh-start adjustments impacting reorganization items, net

34,922

Elimination of accumulated other comprehensive loss

(2,733)

Tax impact of fresh-start adjustments

(73,446)

Net impact on accumulated deficit

$

(41,257)

Schedule of adjustment of reorganization recognized In statement of operation

Predecessor

February 1, 2020

through

    

  

  

August 27, 2020

Gain on settlement of Liabilities subject to compromise

$

3,339,191

Impact of fresh-start adjustments

66,928

Exit Facility and DIP Facility rollover financing costs paid upon Effective Date

(5,032)

Write-off of pre-petition debt and DIP issuance costs

(9,461)

Professional success fees paid upon Effective Date

(21,399)

Professional fees and other bankruptcy related costs

(13,076)

Gain on Deconsolidation of Canadian subsidiary

4,100

Reorganization items, net

$

3,361,251

A net charge of $32.0 million was attributable to discontinued operations and recorded within Income (loss) from discontinued operations, net of tax in the Statement of Operations.  $3,361 million was attributable to continuing operations and presented as Reorganization items, net in the Statement of Operations.

Successor

  

  

Predecessor

August 28, 2020

February 1, 2020

through

through

    

January 31, 2021

August 27, 2020

Cash payment for reorganization items, net

$

784

$

42,916