Isagenix majority sold off to undisclosed investors
Following months of financial uncertainty, Isagenix has been sold to a group of undisclosed investors.
Isagenix’s financial troubles have been brewing in the background for a while.
This is from a September 2022 Moody’s report;
Moody’s believes a deterioration in member base and weakening consumer demand is contributing to revenue declines, which combined with inflationary cost pressures is leading to significant EBITDA erosion.
Isagenix’s cash on hand of $19 million as of June 2022 is insufficient to repay the $29 million of revolver borrowings and term loan amortization of $18.8 million over the next 12 months.
Moody’s anticipates ongoing headwinds in the company’s recruiting efforts to continue.
Isagenix’s current capital structure is unsustainable, prompting Moody’s expectations of a rising likelihood of near-term restructuring and that the company will unlikely be able to raise sufficient new funds to refinance the maturing debt at a manageable interest cost.
That predicted restructuring was announced by Isagenix on February 27th;
Isagenix International … announced today that it has reached a definitive agreement with an ad hoc group of the Company’s investors to secure the long term future of the business.
This agreement, also known as a Restructuring Support Agreement or “RSA,” marks the positive culmination of discussions between the Company and its key financial stakeholders to recapitalize and support the business, eliminating approximately $130 million in senior secured debt.
Under the terms of the RSA, the Company’s investors will take a controlling stake in the business. (The) Coover family … will maintain minority ownership.
In addition to the cash injection, Isagenix co-founders Jim (right) and Kathy Coover are contributing
$95 million of value through the combination of new contributed cash and the forgiveness of debt.
Isagenix has also secured an additional $130 million in debt reduction from other secured lenders.
It’s astonishing that they’re celebrating as if they’ve achieved a victory when in reality, the same management responsible for the financial disaster is still in charge.
In my opinion, the individuals involved in the restructuring seem strikingly similar to those involved in the Arbonne negotiations 10 years ago. I believe this arrangement has been established to facilitate the future sale of the company.
From a business perspective, it has been a catastrophe for the lenders who seem to have been cheated out of over $100 million by being forced into a long debt forgiveness.
I’m referring to the numerous small investors who were part of the funds that loaned money to Isagenix.
I didn’t touch on that in the article but it’s a good point.
Management and ownership got Isagenix into this predicament. That’s not changing with the buyout/bailout.
Jim Coover is still Chairman of the company. Sharron Walsh was appointed Isagenix’s CEO in late 2020. Not sure how much of the financial mess she inherited vs. oversaw between 2020 and now.
I guess we’ll learn soon enough how Isagenix’s financials are doing over the next 12 months.