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 |
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Reoganization |
|
Fresh Start |
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|
|
|
Predecessor |
|
Adjustments |
|
Adjustment |
|
Successor |
ASSETS |
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|
|
|
|
|
|
|
|
|
|
|
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.
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|
| 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 |
|
|
|
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|
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|
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|
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|
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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 |
|
|
through |
|
|
January 31, 2021 |
|
|
August 27, 2020 |
Cash payment for reorganization items, net |
|
$ |
784 |
|
|
$ |
42,916 |
|