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On Tuesday, ContextLogic Inc. (NASDAQ:LOGC) and BC Partners unveiled a strategic investment. A BC Partners-advised fund will acquire up to $150 million in convertible preferred units from ContextLogic Holdings, LLC, a newly formed, wholly owned Delaware-based subsidiary of ContextLogic.
BC Partners, a global investment firm managing approximately 40 billion euros in assets, is leading the investment through its credit arm. ombined with existing cash, this will provide ContextLogic access to up to $300 million and $2.7 billion in net operating losses.
Together, they will explore strategic opportunities to maximize shareholder value while supporting management’s ongoing efforts to streamline operations and drive business growth through acquisitions or expansion.
The Preferred Units will carry a 4.00% dividend, increasing to 8.00% post-acquisition, and convert to common units at a 1:1 ratio. A BC Partners-advised fund will invest $75 million at closing, with Holdings retaining the option to issue an additional $75 million for acquisitions.
ContextLogic will own 58.4% of Holdings’ common units upon full investment, while BC Partners’ fund will hold 41.6% on a fully diluted basis.
“We strongly believe this new investment will provide us with the capital and flexibility needed to complete an attractive acquisition that could serve as a platform for future acquisitions and enable ContextLogic to fully utilize its considerable assets,” said Rishi Bajaj, Chief Executive Officer of ContextLogic.
As part of the transaction, Ted Goldthorpe and Mark Ward will join ContextLogic’s Board upon closing, with Goldthorpe serving as Chairman. Goldthorpe leads BC Partners Credit, and Ward is a principal at BC Partners.
Price Action: LOGC shares are trading higher by 16.30% at $8.39 at the last check on Tuesday.
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