Software supplier eg solutions’ US partner files for bankruptcy protection
BACK office software supplier eg solutions has said the move by its US partner to file for bankruptcy protection is unlikely to impact earnings at the Staffordshire company.
Aspect Software has submitted a petition for so-called Chapter 11 bankruptcy protection in the US Bankruptcy Court in Wilmington, Delaware.
The company, which has a 9.5% equity interest in eg as well as a representative on its board, is seeking approval to restructure its near $800m debt burden and to offer a fully underwritten rights offering of $60m of first-lien debt.
Aspect said in a statement that the company had entered into a pre-arranged agreement with certain unaffiliated holders of its debt obligations. This provided for a financial restructuring and replacement of its existing credit facilities.
Under the pre-arranged agreement, which is subject to court approval, Aspect has negotiated an agreement with its existing lenders that will result in the reduction of more than $320m of debt, new secured financing and an infusion of fresh convertible debt capital to facilitate growth.
Stew Bloom, Aspect’s chairman and CEO, said: “By resetting our capital structure and dramatically improving our balance sheet, we will be well-positioned to compete over the long-term while continuing to accelerate investments in our product and service capabilities.”
It said the transaction provided the company with a new runway to continue the major business transformation it started three years ago.
General unsecured creditors of Aspect are to be paid in full in cash, though existing debt and equity lines are being compromised in whole or in part, said eg in a statement to the London Stock Exchange.
A date for the court hearing has yet to be set, but it is understood that Aspect intends to complete the restructuring process within 105 days.
eg has an existing strategic partnership and re-seller agreement with Aspect dating back to February 2013.
In its statement, eg said: “The eg board will assess the impact of these developments on its relationship with Aspect though its initial assessment is that this will have no impact on the group’s earnings outlook. Further announcements will be made as appropriate.”
The Dunston-based company said it would be announcing its full year results for the year ended January 31, 2016 on March 23 as scheduled.
