Skillsoft Corp. Form 8-K Summary
Business Context and Reporting Period
Skillsoft Corp. filed a Current Report on Form 8-K dated April 4, 2022, reporting the completion of its acquisition of Ryzac, Inc., operating as Codecademy. The filing was signed on April 5, 2022.
Transaction and Key Financial Terms
- Codecademy became an indirect wholly owned subsidiary of Skillsoft through a two-step merger completed on April 4, 2022.
- Total merger consideration consisted of $207.6 million in cash and 30,374,427 shares of Skillsoft common stock, subject to adjustments and holdbacks.
- Consideration varied by holder category, with certain holders receiving cash, shares, or a combination of both.
- Certain Codecademy equity awards were converted into Skillsoft restricted stock units or cash-based consideration, depending on holder status and award terms.
- Skillsoft obtained representation and warranty insurance and established an additional indemnification escrow for specified special indemnities.
Debt, Liquidity, and Capital Structure
- An amendment to Skillsoft’s credit agreement permits up to $160 million of Term B-1 Loans, intended to finance part of the acquisition and related costs, fees, and expenses.
- The amendment permits early adoption of SOFR for existing term loans and sets applicable margins of 4.25% for base-rate borrowings and 5.25% for SOFR borrowings.
- Initial term loans require quarterly amortization of 0.250627% of principal before maturity.
- Repricing-related prepayments are subject to a 2.00% premium before July 16, 2022, and a 1.00% premium from July 16, 2022 through January 16, 2023, subject to the credit agreement’s terms.
- The debt and related guarantees are secured by substantially all personal property of the borrower and guarantor subsidiaries.
Material Changes, Registration Rights, and Other Items
- The 30.4 million shares issued in the merger were unregistered, relying on Section 4(a)(2) and/or Regulation D exemptions under the Securities Act.
- Skillsoft entered into a registration rights agreement requiring it to file a resale registration statement for shares issued to certain former Codecademy equity holders.
- Most registration-rights holders are subject to a 180-day lock-up. The founder holder is generally subject to a lock-up ending on the earlier of two years after closing or a change of control, with a potential partial release for up to 50% of the shares subject to specified conditions.
- The filing includes a press release announcing completion of the mergers but does not provide post-acquisition revenue, earnings, cash flow, margin, or liquidity guidance.
Investor Verification Items
- Verify the final purchase-price allocation, including cash paid, shares issued, holdbacks, escrow amounts, and any contingent consideration.
- Review the merger agreement and credit amendment for final debt balances, maturity dates, covenants, interest-rate provisions, and security interests.
- Assess dilution from the 30,374,427 shares issued and from converted Codecademy options and restricted stock units.
- Confirm the timing and effectiveness of the required resale registration statement and the applicable lock-up restrictions.
- Review subsequent financial statements for Codecademy’s purchase accounting, goodwill, intangible assets, acquisition costs, and any related impairment or integration charges.