Fresh-Start Reporting (Tables) - SOFTWARE LUXEMBOURG HOLDING S.A. (SUCCESSOR) AND POINTWELL LIMITED (PREDECESSOR)
|
5 Months Ended |
Jan. 31, 2021 |
|---|
| Summary of fair value of the Successor Company's equity as of the Effective Date |
The following table reconciles the enterprise value per the Disclosure Statement to the fair value of the Successor Company’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
|
|
| Summary of reconciliation of the Company's enterprise value to reorganization value as of the Effective Date |
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 a liability.
|
|
| Summary of adjustments set forth in the consolidated balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization
|
|
Fresh-Start
|
|
|
|
|
|
|
Predecessor
|
|
Adjustments
|
|
Adjustments
|
|
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 expense 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 asset, 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 shareholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturity 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’ (deficit) equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares (Predecessor)
|
|
|
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 shareholder (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
|
|
| Summary of sources and uses of cash on the Effective Date from implementation of the Plan of Reorganization |
|
(1)
|
|
The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan of Reorganization (in thousands):
|
|
|
|
|
|
|
Sources:
|
|
|
|
|
Release of restricted 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
|
|
| Summary of term loan facility agreement in accordance with the Plan of Reorganization |
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
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 bears 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.
|
|
| Summary of disposition of liabilities subject to compromise |
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
|
|
| Summary of cumulative impact of the reorganization adjustments |
|
(1)
|
|
The table reflects the cumulative impact of the reorganization adjustments discussed above (in thousands):
|
|
|
|
|
|
|
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
|
|
| Summary of reorganization value of Successor company in excess of asset fair value - Goodwill |
|
|
|
|
|
|
(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
|
|
| Summary of fresh-start adjustment to acquired intangibles assets |
|
(1)
|
|
The Company recorded an adjustment to intangible assets for $516.1 million as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value
|
|
Estimated 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
|
|
|
|
| Summary of cumulative impact of the fresh-start adjustments |
|
(1)
|
|
The table below reflects the cumulative impact of the fresh-start adjustments as discussed above (in thousands):
|
|
|
|
|
|
|
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)
|
|
| Summary of reorganization items incurred as a result of the Chapter 11 cases |
Reorganization items incurred as a result of the Chapter 11 cases are presented separately in the accompanying Consolidated Statement of Operations for the period presented, as follows (in thousands):
|
|
|
|
|
|
|
|
Predecessor
|
|
|
|
February 1, 2020
|
|
|
|
through August 27,
|
|
|
|
2020
|
|
Gain on settlement of Liabilities subject to compromise
|
|
$
|
3,339,191
|
|
Impact of fresh-start adjustments
|
|
|
34,922
|
|
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
|
|
$
|
3,329,245
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
August 28, 2020
|
|
|
February 1, 2020
|
|
|
|
through January 31,
|
|
|
through August 27,
|
|
|
|
2021
|
|
|
2020
|
|
Cash payment for reorganization items, net
|
|
$
|
784
|
|
|
$
|
42,916
|
|