Thread regarding Sungard Availability Services layoffs

An article that points out that Sungard's 2nd bankruptcy "is not indicative of a company with solid fundamentals.

https://siliconangle.com/2022/04/11/cloud-services-provider-sungard-files-chapter-11-bankruptcy/

Cloud services provider Sungard Availability Services LP has filed for Chapter 11 bankruptcy some three years after settling a previous Chapter 11 filing.

Reuters reports the company filed its paperwork with the Bankruptcy Court for the Southern District of Texas with about $424 million in secured debt

In a statement today, the company said that it has also commenced similar proceedings for its Canadian subsidiary under the Companies Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto. Sungard’s U.K. subsidiary initiated an administration proceeding on March 25.

Officially, Sungard describes the decision as taking action to strengthen its operating cost structure for future success, which is an interesting way to spin bankruptcy. A Chapter 11 filing in the U.S. allows for a corporation to reorganize assets and debts, but it’s typically one taken by a company with serious financial problems. That this is the second time Sungard has pursued Chapter 11 in recent years is not indicative of a company with solid fundamentals.

Sungard this time is blaming COVID-19 for its latest issues, even though most cloud services providers have thrived during the shift to cloud services and remote working through the pandemic.

“Like many companies, our business has been affected by challenges in our capital structure, driven by the global COVID-19 pandemic and other macroeconomic trends including delayed customer spending decisions, insourcing and reductions in IT spending, energy inflation and reduction in demand for certain services,” Michael K. Robinson, chief executive officer and resident of Sungard Availability Services, said in a statement. “Over the past three years, we’ve made significant network, product and infrastructure investments which are being well-received by customers and gaining significant traction. We believe the Chapter 11 process is a right and critical step forward for the future of our business and our stakeholders.”

Sungard’s issues come down to debt — too much of it. Although the company eliminated more than $800 million in debt in its last Chapter 11 filing, the company still has $424 million of debt on its books, which it’s having issues paying.

Sungard Availability Services, which was spun off in 2014 from SunGard Data Systems Inc., now known as FIS, is privately held. Investment firm Angelo Gordon is the largest shareholder in the company with Blackstone Credit, Carlyle Group, FS/KKR Advisor LLC and Arbour Lane Capital Management LP also holding significant stakes.

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Post ID: @OP+1gdEOkPh

6 replies (most recent on top)

“Sungard this time is blaming COVID-19 for its latest issues, even though most cloud services providers have thrived during the shift to cloud services and remote working through the pandemic.”
Sungard is not a “cloud services” company, and never has been. We kind of tried, but could never get enough backing from management to pull it off. There was always a shinier object that pulled them away from a clear, understandable, path.

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Post ID: @2mcf+1gdEOkPh

@1ozm+1gdEOkPh it was Mitt and his vultures at Bain that were primarily responsible taking all the meat off the bones along with his crony CEO Stern. No CAPEX left for any of the aging data centers. Private Equity only cares about returns without giving other two sh--s.

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Post ID: @1hca+1gdEOkPh

I remember back in the day trying to get additional capex funding and the private equity vultures didn’t want to spend anything. They destroyed this company trying to suck whatever marrow was left on the bone.

Sc--w KKR, Bain, and the rest of the funds

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Post ID: @1ozm+1gdEOkPh

https://finance.yahoo.com/news/sungard-holdings-iii-llc-moodys-220307701.html

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Post ID: @1pfg+1gdEOkPh

Moody's report from 2020 projecting distress.
https://finance.yahoo.com/news/sungard-holdings-iii-llc-moodys-220
Excerpt:
Sungard AS New Holdings III, LLC -- Moody's affirms Sungard AS's Caa2 CFR; appends limited default designation to PDR; changes outlook to stable from negative; will withdraw ratings for business reasons
December 22, 2020

Rating Action: Moody's affirms Sungard AS's Caa2 CFR; appends limited default designation to PDR; changes outlook to stable from negative; will withdraw ratings for business reasons

Global Credit Research - 22 Dec 2020

New York, December 22, 2020 -- Moody's Investors Service (Moody's) has affirmed Sungard AS New Holdings III, LLC's (Sungard AS) Caa2 corporate family rating (CFR) and Caa2-PD probability of default rating (PDR). Moody's has appended the "/LD" designation to the PDR to signal that a "limited default" has occurred. The designation results from Moody's view that the company's initial issuance of a new $102 million first lien term loan due July 2024 (unrated) and a new $298 million second lien term loan due August 2024 (unrated) in an exchange of debt arrangement for the same amount of existing first and second lien debt is a distressed exchange. Immediately after incurring these new first lien and second lien term loans, Sungard AS made prepayments at par of $5 million and $15 million, respectively, to the new first lien and new second lien lenders. Further, as part of the exchange of debt arrangement process a portion of the new first lien term loan totaling $28 million was effectively re-characterized as a delayed draw term loan by participating lenders, and this $28 million amount was also immediately repaid. Under terms of this delayed draw portion of its new first lien term loan the company may redraw amounts up to the full $28 million through February 3, 2022.

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Post ID: @1aei+1gdEOkPh

As soon as the first round of private equity got involved and split Sungard to Sungard AS, it was a beginning of an end. How could a company thrive when it began with a debt burden and couldn't reinvest it's small profits back into the company? With money continuously going to service debt, this is the unfortunate end result. What else is going to change?

Squeeze will be on in the next few months as cuts come in. Middle management's gotta look like they are doing something to help in order to save their own jobs. Get ready to perform another function that you were not originally hired for.

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Post ID: @qrf+1gdEOkPh

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