Edgio files for Chapter 11, plans asset sale to Lynrock

PHOENIX - Edgio, Inc. (NASDAQ: EGIO), a provider of edge network services for content delivery and security, has filed for Chapter 11 bankruptcy and is proceeding with an asset sale under court supervision. The company seeks to manage its restructuring with the support of its primary lender, Lynrock Lake Master Fund LP, which has also entered into a "stalking horse" asset purchase agreement to acquire certain Edgio assets for a credit bid of $110 million.

The company aims to use the Chapter 11 process to secure the highest or best offer for its assets, ensuring continuous operation under new ownership. Edgio's product offerings, including its applications and security suite, Uplynk platform, and delivery network, serve over 935 global customers, and the sale process is expected to finalize within approximately 80 days.

CEO Todd Hinders expressed confidence that the flexibility afforded by the Chapter 11 proceedings would allow Edgio to maintain its commitments to partners and customers. The company has also arranged for debtor-in-possession financing of approximately $15.6 million from Lynrock, subject to court approval. This financing is intended to support ongoing operations throughout the sale process.

To minimize operational disruptions, Edgio has filed standard motions with the court to continue paying employee wages, support critical vendors, and maintain other customary operations during the Chapter 11 cases.

The information in this article is based on a press release statement from Edgio, Inc.

In other recent news, Edgio Inc. has secured a senior term loan credit facility, termed the "Priority Credit Agreement," with Lynrock Lake Master Fund LP. The agreement provides Edgio with $9,146,000 in term loans, resulting in net cash proceeds of $7,500,000 after an 18% upfront fee. The loan, which bears an interest rate of 19.5% per annum, is set to mature on February 23, 2025.

In more recent developments, Edgio has expanded its board of directors from four to five members, with the appointment of Eugene I. Davis. Davis, a seasoned professional with over four decades of experience, will serve as a Class II director and Chairman of the Transaction Committee at Edgio. His term is set for a minimum of six months with a fixed compensation of $40,000 per month.

Also, Edgio faces potential delisting from Nasdaq due to delayed quarterly financial filings, attributed to the resignation of the company's independent accounting firm. In response, Nasdaq has requested a revised compliance plan from Edgio, possibly extending the filing deadline to September 30, 2024. The company is now working to expedite the completion and filing of its quarterly report.

InvestingPro Insights

As Edgio, Inc. navigates through Chapter 11 bankruptcy proceedings, real-time data and insights provide a clearer picture of the company's financial status. According to InvestingPro data, Edgio's market capitalization stands at a modest $15.34 million, reflecting the company's diminished valuation amidst its financial troubles. The Price / Book ratio, as of the last twelve months leading to Q3 2023, is strikingly low at 0.24, suggesting the stock could be undervalued relative to the company's book value—potentially an attractive point for investors looking for distressed assets.

InvestingPro Tips indicate that Edgio operates with a significant debt burden and may have trouble making interest payments on its debt, which is a critical factor to consider in light of the company's bankruptcy filing and potential asset sale. Notably, the company's stock is in oversold territory according to the Relative Strength Index (RSI), and it is trading near its 52-week low. These factors could influence investor perception and the company's ability to attract bids during its asset sale process.

For investors and stakeholders looking for a comprehensive analysis, there are additional InvestingPro Tips available, providing deeper insights into Edgio's financial health and market position. These tips are part of the broader analysis included in the InvestingPro product, which offers a more detailed perspective on the company's outlook.

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