Jagged Peak and TradeGlobal, two of Singapore Post Ltd’s US e-commerce units, have filed for bankruptcy protection under Chapter 11 after an unsuccessful six-month process of finding and securing a suitable buyer for both.
Reuters reported on Thu (19 Sep) that SingPost on Wed evening said: “Under the supervision of the bankruptcy court, the U.S. subsidiaries intend to pursue the sale of all or substantially all of their assets.”
The postal and logistics operator took an impairment of S$98.7 million (US$72 million) on the carrying value of TradeGlobal and Jagged Peak in the year up to Mar 2019, and began the process of finding a buyer for the two the following month, Reuters observed.
SingPost’s previous chief executive acquired Jagged Peak and TradeGlobal for S$253.5 million (US$184.4 million) in 2015.
The dent in profits at SingPost as a result of its two US subsidiaries have affected SingPost’s two largest shareholders, namely Singapore Telecommunications (SingTel) and Alibaba Group Holdings, according to Reuters. Temasek Holdings is also a major stakeholder in SingPost.
Singapore Business Review reported yesterday that SingPost had rejected all offers for the sale of Jagged Peak and Trade Global due to none of them being “acceptable” as observed in an SGX filing.
Both had instead chosen to file petitions for relief in the United States Bankruptcy Court for the District of Nevada.
Under the supervision of the bankruptcy court, the two SingPost US subsidiaries aim to sell all of their assets.
Out of 105 interested parties SingPost signed non-disclosure agreements with, only eight were selected before the options were narrowed down further to two, following which SingPost rejected the terms and conditions as being “commercially unfeasible”.
Nikkei Asian Review reported that SingPost, at the time it acquired the two subsidiaries, “had a vision of building an e-commerce logistics network and technology platform that would cover Asia, Australia, continental North America and Europe”.
What was poised to be among the top five end-to-end e-commerce players in the US resulted in SingPost having to take an impairment of S$185 million (US$$134.2 million) in the financial year ending in March 2017, noted Nikkei Markets, with an independent review revealing that “the former board did not fully consider certain key risks before signing off on the deal”.