Cash-strapped Jumio sold to Facebook co-founder
Identity verification company files US arm for bankruptcy to assist in sale to Eduardo Saverin-backed entity
Jumio is on the brink of selling its business to Facebook co-founder Eduardo Saverin via a bankruptcy process, in a move which is expected to see the identity verification company secure a much-needed US$3.7m (?2.6m) cash injection.
While the deal remains subject to other bids, Jumio said a sale to the Saverin-formed entity, Jumio Acquisition, was the “single best path” to provide the company with the required resources.
In a statement the firm, which provides services to egaming operators such as Betfair and Mr Green, said legacy issues combined with “related government investigations and proceedings” had made it difficult for the firm to secure funding from other avenues.
And in order to complete a deal, Jumio said it will sell its assets under Section 363 of the US Bankruptcy Code, and therefore had placed its US business in voluntary Chapter 11 proceedings in the US Bankruptcy Court of Delaware.
While the company’s subsidiaries located outside of the US have not been included in the court filings, they will form part of the sale to Saverin, who was an early backer of the Jumio business as well as a significant stock and debt holder of the company.
Jumio said it expected all of it operations would continue without disruption during the process, while both its customers and employees would remain unaffected.
“After thoroughly evaluating all available options, we determined that an asset sale is in the best interests of Jumio and our stakeholders,” Stephen Stuut, Jumio CEO, said.
“Despite some of the challenges Jumio’s leadership team inherited, our underlying business remains exceptionally strong. The court-supervised sale and restructuring process will allow us to strengthen the company’s financial structure and extend our leadership position in ID verification,” he added.
As part of the proposed transaction, Jumio Acquisition has committed to provide Jumio with $3.7m in ‘debtor-in-possession’ at a rate of 4% per annum, which the company described as “attractive and below market rate”.
“The fair and orderly process announced today will allow Jumio’s new management and its employees to continue to serve its top tier customers and to realise the company’s potential,” Saverin said.