Ebix inks ‘stalking horse’ agreement with Zinnia, move to pay way for expeditious debt repayment
The move is aimed at strengthening the balance sheet of the company and also position itself for sustainable growth.
New Delhi: Ebix Inc, the US based supplier of on-demand software and e-commerce services has struck a ‘stalking horse’ agreement to sell its North American Life and Annuity assets (the “NA L&A Assets”) to Zinnia, an Eldridge business and leading life insurance & annuity technology company.
The announcement to this effect was made by the company on Monday.
The move is aimed at strengthening the balance sheet of the company and also position itself for sustainable growth. The Ebix-Zinnia agreement also lays out an expeditious path for debt repayment.
Zinnia is a leading life insurance and annuity technology and service company based in Topeka, Kansas.
Protection under Chapter 11
Notably, Ebix and some of its US affiliates have filed for protection under Chapter 11 under US Law. Chapter 11 is a mechanism in the United States to ‘shield’ the company from impending dangers and give it some ‘breathing room’ while it works its way to repay the debt and meet other financial obligations.
By striking a deal with Zinnai, Ebix has managed to raise USD 400 Million for its US asset. This will set an expeditious path for debt repayment.
“The sale of this US asset will serve to pay the US debt back expeditiously under a proper time bound process over the next few months,” Ebix said in a press statement.
It further said that the assets being sold account for just 14.5 per cent of Ebix’s worldwide GAAP revenues for the year-to-date 9-month period.
“This implies that we are targeting to be a debt free company soon while retaining our strong 85 per cent plus business worldwide,” the company statement said.
No Impact on EbixCash
It may be noted that Ebix has made a filing under Chapter 11 but it doesn’t cover EbixCash & its more than 200 affiliates situated outside United States.
This implies that EbixCash and company’s affiliates outside US won’t be impacted by the filing and will continue to operate normally.
“Ebix’s EbixCash & other companies in India, all international subsidiaries and their franchisees around the world are similarly not included in the Chapter 11 filing. All worldwide operations of the Company will continue to operate in the ordinary course and without any interruption. This news has no impact on EbixCash, its employees, partners or vendors,” the company said in a statement.
The company further stated that its financial health remains in great shape and is propped by ‘fantastic operating fundamentals’.