Skillsoft Corp. Debt Disclosure

(12) Long-Term Debt

 

Debt consisted of the following (in thousands):

 

			As of January 31,
		2026				2025
Term Loans - current portion		$	6,404			$	6,404
Current maturities of long-term debt		$	6,404			$	6,404
Term Loans - long-term portion		$	576,990			$	581,793
Original issue discount - long-term portion			(4,032	)			(5,527	)
Deferred financing costs - long-term portion			(2,189	)			(2,999	)
Long-term debt		$	570,769			$	573,267

 

Term Loans

 

On July 16, 2021, a Skillsoft subsidiary, Skillsoft Finance II, Inc. (“Skillsoft Finance II”) entered into a Credit Agreement (the “Credit Agreement”), by and among Skillsoft Finance II, as borrower, another subsidiary - Skillsoft Finance I, Inc. (“Holdings”), the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent, pursuant to which the lenders provided a term loan in the original principal amount of $480 million (the “Original Term Loan”). In connection with the closing of our Codecademy acquisition, Skillsoft Finance II entered into Amendment No. 1 to the Credit Agreement, dated as of April 4, 2022 (the “First Amendment”), among Skillsoft Finance II, Holdings, certain subsidiaries of Skillsoft Finance II, as guarantors, Citibank N.A., as administrative agent, and the financial institutions party thereto as Term B-1 Lenders, which amended the Credit Agreement (as amended by the First Amendment, the “Amended Credit Agreement”), which provided additional Term B-1 Loans in the original principal amount of $160 million. The Original Term Loan and the Term B-1 Loans were each drawn in full on their respective closing dates, and are scheduled to mature on July 16, 2028 (the “Maturity Date”).

 

In addition to the provision of the Term B-1 Loans, the First Amendment, among other things, (a) provided for early opt-in to the Secured Overnight Financing Rate (“SOFR”) for the Original Term Loans (the Original Term Loans together with the Term B-1 Loans, the “Initial Term Loans”) and (b) provided for the applicable margin for the Initial Term Loans at 4.25% with respect to base rate borrowings and 5.25% with respect to SOFR borrowings.

 

We received $153.2 million of net proceeds (net of $4.0 million of financing costs and $2.8 million of original issuance discounts) from the Term B-1 Loans on April 4, 2022. We used the net proceeds and cash on hand for the closing of the Codecademy acquisition on April 4, 2022.

The refinancing via the First Amendment was accounted for as a loan modification for certain lenders and a loan extinguishment for other lenders and debt issuance costs and lender fees were accounted for in proportion to whether the related principal balance was considered modified or extinguished. Accordingly, both newly incurred and deferred financing costs and original issuance discounts of $0.1 million and $2.8 million, respectively, are being amortized as additional interest expense over the term of the Initial Term Loans. 

 

Prior to the maturity thereof, the Initial Term Loans are subject to quarterly principal repayments of $1.6 million.

 

All obligations under the Amended Credit Agreement, and the guarantees of those obligations (as well as certain cash management obligations and interest rate hedging or other swap agreements), are secured by substantially all of Skillsoft Finance II’s personal property as well as the assets of each subsidiary guarantor.

 

Amounts outstanding under the Amended Credit Agreement bear interest, at the option of Skillsoft Finance II, at a rate equal to (a) SOFR (subject to a floor of 0.75%) plus a credit premium based on the tenor of the interest period plus 5.25% for SOFR Loans or (b) the highest of (i) the Federal Funds Effective Rate plus 10.50%, (ii) the “prime rate” quoted by the administrative agent, (iii) Adjusted Term SOFR plus 1.00% and (iv) 1.75%, plus 3.75% for alternative base rate loans. As of January 31, 2026, the outstanding principal balance of $583.4 million of Initial Term Loans bears interest at a rate equal to SOFR plus a credit premium of 0.11% plus a margin of 5.25%, per annum, with a SOFR floor of 0.75%.

 

Voluntary prepayment of the Initial Term Loans is permitted under the Amended Credit Agreement. We are also required to make annual prepayments of outstanding obligations under the Amended Credit Agreement of specified excess cash flow for the prior fiscal year. In addition, prepayments of outstanding obligations under the Amended Credit Agreement may also be required in the amount of specified net cash proceeds received above a specified threshold. Loan parties are subject to various affirmative and negative covenants and reporting obligations under the Amended Credit Agreement. These include, among other things, limitations on indebtedness, liens, sale and leaseback transactions, investments, fundamental changes, assets sales, restricted payments, affiliate transactions, and restricted debt payments. Events of default under the Term Loan Facility include non-payment of amounts due to the lenders, violation of covenants, materially incorrect representations, defaults under other material indebtedness, judgments and specified insolvency-related events, certain ERISA events, and invalidity of loan or collateral documents, subject to, in certain instances, specified thresholds, cure periods and exceptions. As of January 31, 2026, we are in compliance with all covenants.

 

The Amended Credit Agreement contains customary events of default. In the event of a payment or other specified defaults, outstanding obligations accrue interest at the then applicable rate plus 2.00%. If an event of default occurs and is continuing (and is not waived), the administrative agent may declare all amounts outstanding thereunder to be immediately due and payable.

 

Our debt outstanding under the Amended Credit Agreement as of January 31, 2026 matures as shown below (in thousands):

 

Future principal payments due for fiscal years ended January 31:
2027		$	6,404
2028			8,005
2029			568,985
2030			—
2031			—
Thereafter			—
Total payments			583,394
Current portion			(6,404	)
Unamortized original issue discount and issuance costs			(6,221	)
Long-term portion		$	570,769

 

Accounts Receivable Facility

 

We also have access to up to $75.0 million of borrowings under our accounts receivable credit agreement (the “A/R Agreement”) with First Citizens Bank and Trust Company, pursuant to which certain of our accounts receivable are pledged as security for loans made by participating lenders.

 

In November 2024, the A/R agreement was amended to, among other things: (a) extend the maturity date from December 27, 2024 to the earlier of (i) November 26, 2029 or (ii) 90 days prior to the maturity of any corporate debt, (b) reduce the fixed component of the interest rate to 2.61% per annum from 3.11% per annum, (c) increase the highest advance rate on certain eligible receivables from 85% to 90%, (d) reduce the minimum outstanding balance requirement from $10 million to $1 million, and (e) allow for ad hoc borrowings and repayments. Based on seasonality of billings and the characteristics of accounts receivable, some of which are not eligible for advances, we are not always able to access the full $75.0 million available capacity. As of January 31, 2026, $1.0 million was drawn under the A/R agreement and is classified as “borrowings under accounts receivable facility” on the consolidated balance sheet. As of January 31, 2026, approximately $74.0 million was available to be drawn under the A/R Agreement. Under this agreement, when borrowing more than the required minimum, Skillsoft receives proceeds equal to the net present value of the accounts receivable balances used to calculate the borrowing base. The interest rate on borrowings outstanding under the accounts receivable facility was 6.31% as of  January 31, 2026. Skillsoft accounts for these transactions as borrowings since the assets pledged contain the right to future receivables. Borrowings and repayments are presented as cash flows from financing activities in the accompanying consolidated statements of cash flows.

 

When borrowing more than the minimum, the lenders require us to deposit receipts from pledged receivables to a restricted bank account within two business days of receipt. A reconciliation detailing collections against the prior month’s borrowing base and additional receivables to be pledged is submitted monthly. If additional pledged receivables exceed the prior month’s collections, funds from the restricted bank account are returned to us. Skillsoft is required to maintain a restricted concentration balance equal to three months’ interest in a bank account classified as restricted cash on the consolidated balance sheet. The balance in this account was less than $0.1 million as of  January 31, 2026.