SingPost's US units fail to find buyers, seek court protection

In April, SingPost shares leapt when the market opened after it disclosed its decision to sell e-commerce firms Jagged Peak and TradeGlobal.
In April, SingPost shares leapt when the market opened after it disclosed its decision to sell e-commerce firms Jagged Peak and TradeGlobal.ST FILE PHOTO

Mail and logistics company Singapore Post (SingPost) said yesterday its six-month sale process for its US e-commerce businesses Jagged Peak and TradeGlobal has closed, with "no acceptable offers".

The group had received eight expressions of interest that resulted in two non-binding offers, the terms of which were "commercially unfeasible" to SingPost, the mainboard-listed company said in a regulatory filing.

SingPost said it had appointed a top-tier investment bank as financial adviser and reached out to potential buyers globally - a move resulting in 105 interested parties.

Following the developments, the boards of directors of the United States companies have set up board special committees, comprising only independent directors, to seek additional liquidity.

If that is not possible, they will explore options like restructuring, including filing for bankruptcy.

Both companies, meanwhile, have filed for voluntary petitions for relief under Chapter 11 of the US bankruptcy code for the district of Nevada.

"Under the supervision of the bankruptcy court, the US subsidiaries intend to pursue the sale of all or substantially all of their assets," the filing added.

SingPost said it is expecting to incur professional and administrative fees during the process for the proceedings. It will also no longer include TradeGlobal and Jagged Peak in its financial reporting.

For the quarter ended June 30, the unaudited consolidated loss arising from the US subsidiaries was about $6.9 million.

In April, SingPost shares leapt when the market opened after it disclosed overnight its decision to sell the struggling US units. The counter rose to $1.06 - a level not seen since October last year.

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 last year.

SingPost, which counts Singtel as a major stakeholder, bought majority stakes in the US e-commerce companies TradeGlobal Holdings and Jagged Peak for about US$184 million (S$254 million) in 2015.

According to its 2018/2019 annual report, SingPost recorded a total impairment of $98.7 million on the carrying value of TradeGlobal and Jagged Peak.

Jagged Peak provides software and services to help businesses improve profitability across multiple channels. TradeGlobal operates in the fashion, beauty and lifestyle sectors.

SingPost shares closed yesterday at $0.92, down 1.08 per cent.

A version of this article appeared in the print edition of The Straits Times on September 20, 2019, with the headline 'SingPost's US units fail to find buyers, seek court protection'. Print Edition | Subscribe