Ebix reaches ‘stalking horse’ sale agreement for Life and Annuity assets

Ebix announced that it has reached a “stalking horse” agreement to sell its North American Life and Annuity assets to Zinnia, an Eldridge business and leading life insurance and annuity technology and service company, as part of its efforts to strengthen its balance sheet and position the company for sustainable growth. This agreement is part of the strategic decision by the company to seek a value-maximizing transaction that will benefit all stakeholders and put the company on the path towards sustainable growth and profitability. The NA L&A Assets being sold, accounted for 14.5% of Ebix‘s worldwide GAAP revenues for the year-to-date nine-month period preceding September 30. To provide the time needed to identify and execute on its plans to effectuate the NA L&A Assets sale and to deleverage its balance sheet in a timely and efficient manner with the support of its key creditors and customers, U.S.-based Ebix, Inc. and certain U.S. affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Ebix’s approximately 200 affiliates outside the United States are not included in the U.S.-only Chapter 11 filing and will continue to operate normally. Ebix’s 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. The company will continue working with its existing customers, vendors, partners, and other stakeholders in the ordinary course of business. Ebix has secured the debtor-in-possession financing from its existing lenders to consummate these proceedings and continue business in the ordinary course. Zinnia’s proposed acquisition of the NA L&A Assets would allow for a seamless transition for Ebix’s customers. The sale will be implemented under Section 363 of the Bankruptcy Code, which will allow other potential bidders to submit bids through a Court-supervised competitive bidding process and allows for an auction of the NA L&A Assets. A “stalking horse” agreement serves to set up a baseline price by Zinnia for competitive bids, for the acquisition of Ebix’s NA L&A assets. Under the terms of the asset purchase agreement (the “APA”), Zinnia will pay $400M subject to certain purchase price adjustments as set forth in the APA, subject to court approval. The company has retained Jefferies LLC as investment banker to assist in conducting a value-maximizing marketing and sale process of the NA L&A Assets. The company continues to engage with both strategic and institutional buyers regarding a potential sale transaction. The company has filed with the Court a series of customary “First Day Motions” to facilitate a smooth continuation of day-to-day operations for customers, employees, and other business partners. The motions are expected to be addressed by the Court in the coming days.