Is Cengage sun setting? Will the demand to increase revenuein every department lead to a pay cut for the c suite? hahaha transparency
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Greetings,
There will be no sale. National Geographic may be spun off, as has been rumored for years, but it would likely go to a competitor who would gut most of the staff.
PE makes money by investing in distressed companies. These investments can be in the form of bonds or even a revolving credit line. The distressed firm usually needs a lot of cash to turn things around.
If I had to guess what would happen:
Cengage's owners use their lawyers to steer a bankruptcy to a state like Deleware.
Cengage's owners petition for a 363 sale. What this means is that the company is auctioned off without any of its debt.
Cengage's owners, being the largest lender, propose to buy the company back for pennies on the dollar and agree to forgive all of the debt Cengage owes.
Don't think this could happen? Look up Sun Capital and what happened with Friendly's.
Apax is likely preparing the company for a sale. Slashing the cost base and juicing revenue in the short term is how private equity typically gets as much as they can out of a sale.
Wait. You can’t be serious. Increase revenue? This is now Office Space.