Business Context and Reporting Period
This Form 8-K, dated August 19, 2020, is filed by comScore, Inc. to fulfill a cleansing requirement under a November 2019 Amendment Agreement with Starboard Value LP. The filing discloses material, nonpublic information regarding an ongoing strategic review to maximize shareholder value, including potential sale options.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, or margin figures for the current period. Key financial context includes:
- Debt: The Company holds senior secured convertible notes held by Starboard Value LP, maturing in January 2022.
- Liquidity/Transaction Terms: Proposals received included a change of control "make whole" provision requiring repayment of 120% of the outstanding principal amount of the Notes, plus accrued interest.
- Valuation: Received proposals valued the Company's common stock below the then-current trading price.
Material Changes and Strategic Review
Beginning in Q4 2019, comScore engaged financial advisors (Goldman Sachs & Co. and Evercore) to conduct a strategic review. Key developments include:
- Process Status: Multiple indications of interest were received in late January 2020. The process was delayed by the COVID-19 pandemic.
- Proposals: In Q2 2020, updated proposals were received, including one with Starboard participation offering acquisition financing for 50% of its indebtedness.
- Board Decision: The Board rejected these proposals, determining they undervalued the Company and were not in shareholders' best interests, particularly given the 120% make-whole premium and adverse market conditions.
- Current Stance: No party was willing to continue without assurance of a transaction at the proposed lower valuations. The Company is exploring other alternatives.
Guidance, Outlook, and Risks
Outlook and Next Steps:
- The Company expects to conclude discussions and announce either a definitive agreement or a decision to continue as an independent company by its third-quarter earnings release.
- The Board remains open to proposals regardless of whether current directors and officers are retained.
- There are no assurances regarding the timing or outcome of the strategic review.
- Success of the strategic review depends on the cooperation and approval of Starboard Value LP.
- Forward-looking statements are subject to risks including delays, external market conditions, and the impact of the COVID-19 pandemic.
- The Company previously withdrew its 2020 earnings guidance; diligence materials from late 2019 are no longer considered material nonpublic information.
Investor Verification Checklist
- Verify the status of the strategic review and any definitive agreements announced in the upcoming Q3 earnings release.
- Confirm the outstanding principal amount of the Starboard Notes and the specific terms of the 120% make-whole provision.
- Monitor for any updates regarding the Company's ability to refinance or repay the Notes maturing in January 2022.
- Review the Company's most recent 10-Q or 10-K for actual financial performance metrics, as this 8-K contains no operational financial data.