Company to receive investment from Magnetar to
fortify and expand business operations
Appgate (OTCMKTS: APGT, “the Company”), the secure access
company, today announced a comprehensive restructuring plan
designed to enhance its financial position and drive sustainable
growth and performance. Key aspects of this plan include
deleveraging Appgate’s balance sheet to propel the Company toward
profitability.
As part of the restructuring process and in a strategic move to
streamline operations and increase cost efficiencies, Appgate will
transition to a privately held entity, withdrawing from public
trading and deregistering with the Securities and Exchange
Commission— a decision supported by the Company’s board of
directors and creditors.
Magnetar, a leading alternative investment firm with $13.4B1 in
assets under management and a longstanding investor in Appgate, has
committed to provide incremental investment to bolster Appgate’s
balance sheet and strengthen its short- and long-term financial
health. This support is part of a broader commitment from Magnetar
and other investors to aid Appgate through the restructuring phase,
which is ultimately aimed at helping the company emerge
debt-free.
The capitalization process will allow the company to enhance its
offerings and growth prospects in the Universal Zero Trust Network
Access (ZTNA) and Fraud Protection markets through further
investment in product innovation as well as enhanced sales,
marketing, and customer support capabilities.
The restructuring will not impact current or future operations,
customer commitments, or trade partnerships, which are expected to
continue seamlessly.
“Appgate secures and protects an organization's most valuable
assets and applications. We are committed to providing secure
access to business-critical systems and delivering substantial cost
efficiencies at scale through purpose-built solutions,” said Leo
Taddeo, CEO and President of Appgate. “This recapitalization and
new funding will allow us to renew our focus on driving leading
edge R&D, and reinvest in areas that drive growth, building
upon the success of our foundational offerings while continuing to
safeguard our customers’ business-critical systems and
information.”
He added, “As a private company, Appgate will be able to operate
more effectively and efficiently, which we believe is in the best
interest of the Company as well as its employees, shareholders and
customers. We look forward to partnering with our capital providers
to strengthen the Appgate platform in pursuit of our long-term
strategy to drive continued innovation in cybersecurity.”
“Across industries, we are seeing that traditional security
measures struggle to keep pace in the evolving threat landscape,
and there is an urgent demand for solutions that offer a dynamic,
adaptive framework for modern security, compliance, and risk
management requirements,” said David Snyderman, Managing Partner at
Magnetar. “Appgate offers compelling cybersecurity products with
cutting-edge technology to fit this need. Based on customer
feedback, it’s clear that Appgate’s solutions deliver value to
them, and that the leadership team understands what it takes to
resolidify the business and grow it in the years ahead. We believe
that Appgate will be more strongly positioned for the future as a
private company and we look forward to working with the entire
Appgate team as it embarks on its next phase of growth.”
The restructuring will be executed through a prepackaged,
consensual bankruptcy in which all of the Company’s existing
creditors have either agreed to convert their debt into equity or
forego the balance of their debt. Importantly, Appgate’s unsecured
creditors will receive full payment in the ordinary course of
Appgate’s business. To that end, Appgate has filed a voluntary
petition for Chapter 11 protection under the United States
Bankruptcy Code in the United States Bankruptcy Court for Delaware
in order to efficiently manage the recapitalization transaction.
Appgate expects the Company to emerge from Chapter 11 debt
free.
Appgate common stock will continue to trade on the OTC through
the pendency of the Chapter 11 process. Common shares are expected
to be canceled and receive no distribution as part of Appgate’s
restructuring.
Kirkland & Ellis LLP is serving as legal advisor and Portage
Point Partners, LLC is serving as investment banker and financial
advisor to Appgate. Willkie Farr & Gallagher LLP is serving as
legal advisor and Uzzi & Lall and M3 Partners are serving as
financial advisors to Magnetar.
Cautionary Statements
This press release contains certain forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as
amended. Statements that do not relate strictly to historical or
current facts are forward-looking and can be identified by the use
of words such as “anticipate,” “estimate,” “could,” “would,”
“should,” “will,” “may,” “forecast,” “approximate,” “expect,”
“project,” “seek,” “predict,” “potential,” “intend,” “plan,”
“believe,” the negatives of such terms and other words of similar
meaning. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release include
statements regarding Appgate and its industry relating to matters
such as anticipated future performance and business prospects.
The forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from projected
results. Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
Appgate has based these forward-looking statements on current
expectations and assumptions about future events, taking into
account all information currently known by Appgate. While Appgate
considers these expectations and assumptions to be reasonable, they
are inherently subject to significant business, economic,
competitive, regulatory and other risks and uncertainties, many of
which are difficult to predict and beyond Appgate’s control. These
risks and uncertainties include, but are not limited to those
described under the section entitled “Risk Factors” in Appgate’s
Form 10-K for the fiscal year ended December 31, 2022 filed with
the Securities and Exchange Commission (the “SEC”) on March 31,
2023, as updated by any subsequent filings which Appgate makes with
the SEC. Should one or more of these risks or uncertainties
materialize, or should any of the assumptions prove incorrect,
actual results may vary in material respects from those projected
in these forward-looking statements. Appgate will not and does not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
About Appgate
Appgate secures and protects an organization's most valuable
assets and applications. Appgate is the market leader in Zero Trust
Network Access (ZTNA) and online fraud protection. Appgate products
include Appgate SDP for Universal ZTNA, as well as Appgate Digital
Brand Protection and Appgate Adaptive Authentication for fraud
prevention. Appgate services include threat advisory analysis, pen
testing and ZTNA implementation. Appgate safeguards thousands of
enterprises and government agencies worldwide. Learn more at
appgate.com.
1 As of December 31, 2023.
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appgate@zagcommunications.com media@magnetar.com