Ebix reaches agreement with Zinnia and files for Chapter 11
Insurance software firm Ebix has reached a “stalking horse” agreement to sell its North American Life and Annuity assets to Zinnia, an Eldridge business and 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.”
The NA L&A Assets being sold, accounted for 14.5% of Ebix’s worldwide GAAP revenues for the YTD 9-month period preceding September 30, 2023.
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, Zinnia will pay $400 million subject to certain purchase price adjustments as set forth in the APA, subject to Court approval.
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, US-based Ebix and certain US 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 filing and will continue to operate normally. Ebix’s international subsidiaries and their franchisees around the world are similarly not included in the filing. All worldwide operations of the Company will continue to operate in the ordinary course and without any interruption.
Ebix blamed its bankruptcy on rising interest rates and debt. On November 15, the company failed to meet another deadline to pay back a $617 million loan. Creditors had declared the company in default in September after earlier repayment delays. The lenders, a consortium of US banks, have given the company until December 17 to raise money.
“Zinna’s proposal acts as a baseline for competitive bids for the acquisition of our North American Life and Annuity assets to a prospective strategic software company, who can seamlessly handle our NA L&A customer base. During the Chapter 11 process, operations worldwide will continue in the ordinary course while we complete the marketing and sale process to address the maturity of the Company’s credit facility. With less than 15% of our worldwide revenues coming from the NA L&A assets being sold to address the credit, and the rest of the businesses of the company continuing to exhibit strong fundamentals, we believe that the company’s future is bright – with strong operating fundamentals, a robust business model, world-class products, and a continued ability to generate healthy operating cash flows across the world.” – Robin Raina, president and CEO of Ebix.
