Summary: Sungard Availability Services will file for Chapter 11 bankruptcy as it restructures and reduces its debt, which is reported to be at nearly $1.3b. A majority of the creditors have agreed to a new capital structure that will see the creditors take over the company’s equity. Six private equity firms back Sungard AS: Bain Capital, Blackstone Group, KKR & Co., Silver Lake Management, Providence Equity Partners and TPG Capital. They had bought out Sungard back in 2005. There has been some detailed reporting out there. The plan is for Sungard to come out of bankruptcy with $400m in debt on the books (writing off the other $800m or so). The PE firms will be replaced by the creditor groups. CEO Andrew Stern went on record with media outlets saying a big mistake for the company was reacting too slowly to the rise of public cloud, which made its traditional backup and recovery model increasingly out of date. Customers cancelled and moved to public cloud services and Sungard did not pivot fast enough. Sungard Availability Services still generates around $1b in revenue, but this has fallen off from recent highs closer to $1.4b. There have quietly been data centre divestments at Sungard of late. Expect that to continue and for the business to continue selling off legacy or underperforming assets and product lines. The business is expected to keep operating and the plan is to get on better footing and try to get back into growth mode.
↧