SingPost US units to file for Chapter 11 after sale bid falls through

Singapore

MAIL and logistics firm Singapore Post (SingPost) has called off the sale of its beleaguered US e-commerce businesses, which will now seek bankruptcy protection instead.

Following a six-month sale process, "no acceptable offers" were found for Jagged Peak and TradeGlobal, the company said in a Singapore Exchange filing on Thursday.

The group had received eight expressions of interest which resulted in two non-binding offers, the terms of which were "commercially unfeasible to SingPost". It had appointed a top-tier investment bank as a financial adviser and reached out to potential buyers globally, which saw 105 parties showing interest.

Separately, the boards of directors of the US companies have set up special committees comprising only independent directors to seek additional liquidity. If that is not possible, they will explore options such as restructuring - including filing for bankruptcy. Following from this, both companies have filed for voluntary petitions for relief under Chapter 11 of the US bankruptcy code for the district of Nevada. Chapter 11 of US bankruptcy code allows companies in financial distress temporary protection and breathing room to restructure their debts; reorganise their business; and also propose a marketing and sale process with strategic buyers and financial investors.

TradeGlobal and Jagged Peak are seeking protection to obtain financing and implement a sale process for "substantially all their assets", SingPost said in response to BT queries.

The company is expecting to incur professional and administrative fees during the process for the proceedings, which are not expected to be material. It will also no longer include TradeGlobal and Jagged Peak in its financial reporting.

For the quarter ended June 30, SingPost's unaudited consolidated loss arising from the US subsidiaries was around S$6.9 million.

In April, its shares leapt when the market opened after the company disclosed overnight that it had decided to sell off the struggling US units. The counter rose to S$1.06 - then a level not seen since October 2018.

Market watchers noted at the time that dropping the US units could lift the group's earnings by about 30 per cent based on figures for the nine months to Dec 31, 2018.

SingPost bought majority stakes in TradeGlobal and Jagged Peak for about US$184 million in 2015.

Jagged Peak provides software and services to help businesses improve profitability on multiple channels. Examples are platforms that can be integrated with warehouse or transport management systems.

TradeGlobal, meanwhile, operates in the fashion, beauty and lifestyle sectors. It provides website development, logistics, digital marketing strategies, creative services and order management.

According to its 2018/2019 annual report, SingPost recorded a total impairment of S$98.7 million on the carrying value of TradeGlobal and Jagged Peak. The move followed a strategic review of the US units which also led to the formalisation of restructuring plans with a provision of S$8.6 million.

SingPost currently counts Singtel as its largest shareholder, with Temasek Holdings and Alibaba Group having deemed interest. SingPost shares on Thursday fell one cent to S$0.92.