SINGAPORE (Sept 19): Singapore Post (SingPost) today announced that its two e-commerce businesses in the US – Jagged Peak and TradeGlobal – have filed for voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code.
This came on the back of the group failing to find a buyer for the two e-commerce units. It ran a comprehensive sale process over almost six months, which saw 105 interested parties that signed non-disclosure agreements and led to eight expression of interest and finally two non-binding offers.
However, the offers were on terms and conditions that the group found to be commercially unfeasible. Hence, SingPost ended the sale process.
Following this, SingPost is expected to incur professional and administrative fees during the process for the Chapter 11 proceedings, though these are not expected to be material.
The two US subsidiaries will also no longer be included in the group’s consolidated financial reports. In the group’s latest quarter ended June, the unaudited consolidated loss arising from the US subsidiaries came up to approximately $6.9 million.
Analysts at DBS Group Research believe the bankruptcy proceedings are likely to at best enable SingPost’s US entities to pay off all outstanding liabilities.
“In the meantime, we believe ongoing losses and professional fees will be incurred as bankruptcy proceedings goes on with SPOST seeking to maximise any recoverable amount from its assets. The proceedings are likely to see Jagged Peak and TradeGlobal claiming from their debtors, which should largely be their customers,” says lead analyst Lim Rui Wen in a flash note on Sept 19.
“Creditors of the US subsidiaries, which we expect to comprise trade creditors and working capital loans, are also expected to file for claims subsequently with the filing under Chapter 11, though we do not expect the amount to be huge,” she adds.
The brokerage is maintaining its “hold” call on SingPost with a target price of 96 cents.
Shares in SingPost closed 1 cent lower, or down 1.1%, at 92 cents on Sept 19.
