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OAKLAND, Calif. - ContextLogic Inc. (NASDAQ: LOGC), known as ContextLogic, has announced a strategic investment by BC Partners, a leading alternative investment manager. Currently trading at $7.22 with a market capitalization of $191 million, the company has seen a significant 32% price increase over the past six months, according to InvestingPro data. Under the terms of the agreement, a fund advised by BC Partners Advisors L.P. will purchase up to $150 million of convertible preferred units of ContextLogic Holdings, LLC, a newly-formed subsidiary of ContextLogic.
The investment, along with existing cash, provides ContextLogic with access to up to $300 million, enhancing its ability to pursue strategic acquisitions and capitalize on $2.7 billion of cumulative net operating losses. While InvestingPro analysis shows the company holds more cash than debt, it’s also rapidly burning through its cash reserves. The Preferred Units carry an initial dividend rate of 4.00%, escalating to 8.00% post-acquisition, and are convertible into common units on a one-to-one basis.
Upon the investment’s completion, ContextLogic will retain a 58.4% ownership of Holdings, with BC Partners holding 41.6% on a fully diluted basis, assuming additional convertible preferred units are issued. Ted Goldthorpe, Head of BC Partners Credit, is poised to become Chairman of ContextLogic’s Board, with Mark Ward also joining the Board.
Rishi Bajaj, CEO of ContextLogic, expressed confidence in BC Partners’ ability to aid in maximizing shareholder value, citing their experience and capital raising capabilities. Goldthorpe highlighted BC Partners’ commitment to leveraging ContextLogic’s strong balance sheet and exploring strategic opportunities.
The partnership follows ContextLogic’s initiatives to streamline operations and focus on acquisitions. However, no agreements with potential acquisition targets have been confirmed, and there is no assurance that any acquisition will be completed. Rothschild & Co served as the financial advisor, while Schulte Roth & Zabel LLP and Proskauer Rose LLP provided legal counsel to ContextLogic and BC Partners, respectively.
ContextLogic, having sold most of its operating assets in April 2024, is exploring strategic alternatives for shareholder value generation. BC Partners, with approximately €40 billion in assets under management, launched BC Partners Credit in February 2017, targeting middle-market companies across various sectors.
This news is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. InvestingPro data reveals the company’s overall financial health score is currently rated as WEAK, with particularly concerning metrics in profitability. Subscribers can access 11 additional ProTips and comprehensive analysis through the Pro Research Report, offering deeper insights into the company’s financial position. Actual results may differ materially from those suggested by these statements due to various factors, including the company’s strategic decisions and the risks associated with future acquisitions.
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