Skillsoft emerges from Chapter 11 case with stronger balance sheet

By Caroline Salls

Pittsburgh, Aug. 27 – Skillsoft Corp. announced Thursday that it has emerged from Chapter 11 following an expedited court-supervised process with a right-sized capital structure, stronger balance sheet and significant additional liquidity to drive long-term growth and success, according to a news release.

The company’s pre-packaged plan of reorganization was confirmed on Aug. 6 by the U.S. Bankruptcy Court for the District of Delaware.

Building on its strong foundation and global customer base, the company said it will invest in new products, solutions and content to drive additional value for customers as they continue adapting at an unprecedented pace in response to the Covid-19 pandemic, a growing skills gap and evolving workplace needs.

“With our stronger balance sheet and significantly enhanced financial resources, we will continue our focus on investing in best-in-class solutions and innovation,” Skillsoft chief executive officer and SumTotal chief administrative officer John Frederick said in the release.

“The digital learning industry has reached a turning point, and we are well-positioned to provide enhanced and expanded offerings when virtual learning is more relevant than ever in driving the success of an organization.”

Through its financial restructuring process, Skillsoft reduced its total debt by about $1.5 billion and eliminated roughly $100 million in annual interest payments.

The company said it now has more than $50 million in cash.

As previously reported, Skillsoft filed bankruptcy to implement a restructuring support agreement reached with a majority of its first-lien and second-lien lenders.

Under the pre-packaged plan based on the restructuring support agreement, holders of the company’s first-lien debt will receive their share of $410 million in takeback first-lien debt and 96% of the equity in the reorganized company.

Holders of second-lien debt will receive their share of 4% of the equity, as well as warrants to purchase up to 15% of equity in the reorganized company at various price thresholds based on first-lien debtholders achieving specified recovery levels.

Holders of general unsecured claims will be paid in full in the ordinary course of business.

Holders of existing parent equity interests will receive no distribution. Other existing interests will be cancelled.

The company said its comprehensive de-leveraging includes reducing first-lien and second-lien debt to $410 million from $2 billion, with $525 million in total net debt.

Weil, Gotshal & Manges LLP served as legal counsel to Skillsoft, Houlihan Lokey Capital, Inc. served as investment banker and AlixPartners LLP served as financial adviser.

Skillsoft is a Boston-based provider of cloud-based learning services. The company filed bankruptcy on June 14 under Chapter 11 case number 20-11532.

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