ContextLogic Files Definitive Proxy Statement Regarding Proposed Transaction with Qoo10
ContextLogic Inc. (WISH) recommends stockholders vote 'FOR' the pending transaction with Qoo10 to preserve $2.7 billion of NOLs. The special meeting is set for April 12, 2024, to finalize the acquisition of Wish ecommerce platform for $173 million in cash.
The recommendation by the board of ContextLogic Inc. to vote 'FOR' the proposed asset sale to Qoo10 represents a significant strategic move, potentially affecting the company's financial structure and market valuation. The preservation of $2.7 billion in Net Operating Losses (NOLs) is a key financial element. NOLs can offset future taxable income, thus reducing potential tax liabilities. This preservation can be attractive to investors as it directly impacts the bottom line.
From an investment standpoint, the estimated cash position post-transaction provides insight into the company's liquidity and operational runway post-sale. A cash position of $150 million to $157 million, while substantial, must be evaluated against the company's burn rate and future investment needs. Stakeholders should consider how this liquidity aligns with the company's strategic goals and whether it provides a buffer for future growth or restructuring.
The e-commerce sector is highly competitive, with several large players dominating the market. The sale of ContextLogic's Wish platform to Qoo10 may reflect a strategic exit from a challenging market or a pivot towards more profitable or sustainable business models. The impact on the stock market could be twofold. On one hand, this move could be perceived as a positive step towards financial stability and a more focused business strategy, potentially leading to an uptick in investor confidence. On the other hand, the sale of a core asset might raise concerns about the company's long-term viability and market presence.
Moreover, the transaction terms and the final cash on hand will influence the company's ability to invest in new ventures or technologies, which is critical in the fast-evolving e-commerce industry. Investors should monitor the company's strategic announcements post-transaction to gauge the future direction and potential for growth.
The unanimous recommendation by the board underscores the legal due diligence typically undertaken in such transactions. It is indicative of a consensus that the deal aligns with shareholder interests. The legal implications of the NOL preservation are substantial as they involve intricate tax regulations. Investors should note that such transactions are structured to ensure compliance with tax laws while maximizing financial benefits.
Furthermore, the legal structure of the deal, including any purchase price adjustments, will have implications for the final valuation of the transaction. Stakeholders should assess the robustness of the transaction agreement, looking for clauses that could affect the final outcome, such as material adverse change clauses or contingency arrangements.
03/18/2024 - 08:00 AM
Board Unanimously Recommends Stockholders Vote “FOR” Pending Transaction with Qoo10 and Ensure the Preservation of $2.7 Billion of NOLs
Stockholders to Receive Proxy Materials in Coming Days to Vote and Approve Transaction
Special Meeting to be Held on April 12, 2024
SAN FRANCISCO, March 18, 2024 (GLOBE NEWSWIRE) -- ContextLogic Inc. (d/b/a Wish) (NASDAQ: WISH) (“ContextLogic” or the “Company”) today announced that a special meeting of its stockholders has been called to consider and vote on its proposed transaction with Qoo10 Pte. Ltd. (“Qoo10”), among other related proposals (the “Special Meeting”). As previously announced on February 12, 2024, a Qoo10 wholly owned subsidiary (the “Buyer”) will acquire substantially all of the Company’s operating assets and liabilities, principally comprising its Wish ecommerce platform (the “Asset Sale”), for approximately $173 million in cash, subject to certain purchase price adjustments. Taking into account the Company’s current estimates of the impact of those purchase price adjustments, the Company estimates that ContextLogic’s cash on hand (including the net proceeds from the Asset Sale) would be approximately $150 million to $157 million if the Asset Sale closes on or about April 16, 2024.
The Special Meeting will be held virtually on April 12, 2024 at 10 a.m. Pacific time, and ContextLogic stockholders of record at the close of business on March 7, 2024 are entitled to vote at or in advance of the Special Meeting. The ContextLogic Board of Directors (the “Board”) unanimously recommends that ContextLogic stockholders vote “FOR” all proposals to be voted on at the Special Meeting.
Following the close of the Asset Sale, ContextLogic will have limited operating expenses and a balance sheet that will be debt-free and will include net cash proceeds from the Asset Sale, approximately $2.7 billion of Net Operating Losses (“NOLs”) carryforwards and certain retained assets. The Board intends to use the proceeds from the transaction to help utilize its NOLs. The Board also intends to explore the opportunity for a financial sponsor to help ContextLogic realize the value of its tax assets.
The Board is unanimous in its view that the proposed sale of the Company’s operating assets and liabilities, while preserving the significant NOLs and certain other tax attributes, represents the best path forward to maximize value for ContextLogic stockholders. The Company’s post-closing Board will conduct a careful and extensive review of available opportunities for the Company’s NOLs and certain other tax attributes, and there is no set timeframe for completing the exploration of alternatives. The expectation is that, after that review has run its course, the Board will authorize the Company to distribute its cash to stockholders if the Board eventually determines that it will be unable to utilize the NOLs and certain other tax attributes.
The Company expects to complete the transaction in the second quarter of 2024, subject to the approval of ContextLogic’s stockholders and other customary closing conditions. To facilitate the solicitation of proxies in connection with the Special Meeting, the Company has filed definitive proxy materials with the U.S. Securities and Exchange Commission (the “SEC”).
The ContextLogic Board mailed the following to stockholders:
For more information on the transaction, please visit ir.wish.com/
About Wish Wish mobile app , visit www.wish.com or follow @Wish on Facebook , Instagram and TikTok or @WishShopping on X (formerly Twitter ) and YouTube .
Additional Information and Where to Find It
In connection with the Asset Sale, the Company has filed with the SEC, and will furnish to the Company’s stockholders, a definitive proxy statement, and other relevant documents pertaining to the transactions contemplated by the asset purchase agreement with the Buyer and Qoo10 (the “Transactions”). Stockholders of the Company are urged to read the definitive proxy statement and other relevant documents carefully and in their entirety because they contain important information about the Transactions. Stockholders of the Company may obtain the definitive proxy statement and other relevant documents filed with the SEC free of charge at the SEC’s website at www.sec.gov or by directing a request to ContextLogic Inc., One Sansome Street, 33rd Floor, San Francisco, California 94104, Attention: Ralph Fong.
Participants in the Solicitation
The directors, executive officers and certain other members of management and employees of the Company are “participants” in the solicitation of proxies from stockholders of the Company in favor of the Transactions. Information regarding the persons who, under the rules of the SEC, are participants in the solicitation of the stockholders of the Company in connection with the Transactions, including a description of their direct or indirect interests in the Transactions, by security holdings or otherwise, are set forth in the definitive proxy statement filed by the Company with the SEC. Information regarding the Company’s directors and executive officers, their ownership of Company stock, and the Company’s transactions with related parties is contained in the sections entitled “Directors, Executive Officers, and Corporate Governance,” “Security Ownership of Certain Beneficial Owners and Management,” and “Certain Relationships and Related Party Transactions” in the Company’s definitive proxy statement on Schedule 14A for the Company’s 2023 Annual Meeting of Stockholders, which was filed with the SEC on March 9, 2023 (and which is available at https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000114036123010911/ny20006182x2_def14a.htm), in the Company’s Current Report on Form 8-K filed with the SEC on April 11, 2023 (and which is available at https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000095017023012442/wish-20230410.htm), and in the Company’s Current Report on Form 8-K filed with the SEC on December 1, 2023 (and which is available at https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000095017023067343/wish-20231129.htm). To the extent holdings of Company securities by the directors and executive officers of the Company have changed from the amounts of securities of the Company held by such persons as reflected therein, such changes have been or will be reflected on Statements of Change in Ownership on Forms 3 or Forms 4 filed with the SEC. These documents can be obtained free of charge from the sources indicated in the previous section. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the definitive proxy statement filed with the SEC.
Forward Looking Statements
Except for historical information, all other information in this communication consists of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, and related oral statements the Company, Qoo10 or the Buyer may make, are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. For example, (1) conditions to the closing of the transaction may not be satisfied, (2) the timing of completion of the transaction is uncertain, (3) the amount of the purchase price adjustment under the asset purchase agreement with the Buyer and Qoo10 is uncertain and may be material, (4) the amount of that purchase price adjustment could be adversely affected by any delays in closing the transaction, including delays in obtaining the stockholder vote at the Special Meeting, (5) there can be no assurance as to the extent to which the post-closing Company will find opportunities to utilize the NOLs, and when any such utilization will occur, (6) the business of the Company may suffer as a result of uncertainty surrounding the transaction, (7) events, changes or other circumstances could occur that could give rise to the termination of the asset purchase agreement with the Buyer and Qoo10, (8) there are risks related to the disruption of management’s attention from the ongoing business operations of the Company due to the transaction, (9) the announcement or pendency of the transaction could affect the relationships of the Company with its clients, operating results and business generally, including on the ability of the Company to retain employees, (10) the outcome of any legal proceedings initiated against the Company, Qoo10 or the Buyer following the announcement of the transaction could adversely affect the Company, Qoo10 or the Buyer, including the ability of each to consummate the transaction, and (11) the Company may be adversely affected by other economic, business, and/or competitive factors, as well as management’s response to any of the aforementioned factors.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and other documents of the Company on file with the SEC. Neither the Company nor Qoo10 or the Buyer undertakes any obligation to update, correct or otherwise revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company, Qoo10 or the Buyer and/or any person acting on behalf of any of them are expressly qualified in their entirety by this paragraph.
Contacts
Investor Relations:
Media:
Nick Lamplough / Dan Moore / Jack Kelleher, Collected Strategies WISH-CS@collectedstrategies.com
A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/8a5f00fc-5643-44ec-98b4-11cba2d3e80a
Photos accompanying this announcement are available athttps://www.globenewswire.com/NewsRoom/AttachmentNg/b3e15cbd-49a8-4ebb-96c0-c6755ba4e42c https://www.globenewswire.com/NewsRoom/AttachmentNg/abd0a697-39ab-4501-926f-4a099d80788a
What does ContextLogic Inc. recommend stockholders vote for?
ContextLogic Inc. recommends stockholders vote 'FOR' the pending transaction with Qoo10.
When is the special meeting scheduled to be held?
The special meeting is set to be held on April 12, 2024.
What is the estimated cash on hand for ContextLogic Inc. after the Asset Sale?
ContextLogic Inc. estimates its cash on hand to be approximately $150 million to $157 million after the Asset Sale closes.
How much is the Buyer acquiring ContextLogic Inc.'s operating assets and liabilities for?
The Buyer is acquiring ContextLogic Inc.'s operating assets and liabilities, primarily the Wish ecommerce platform, for approximately $173 million in cash.
What is the total amount of NOLs being preserved through the transaction with Qoo10?
The transaction with Qoo10 aims to preserve $2.7 billion of NOLs for ContextLogic Inc.
