SINGAPORE (Nikkei Markets) -- Singapore Post's money-losing U.S. subsidiaries filed for bankruptcy protection after failing to find buyers, bringing to a close the postal and logistics operator's ill-fated diversification into North America that cost more than $180 million.
SingPost, whose major shareholders include Singapore Telecommunications and China's Alibaba Group Holding, said that e-commerce businesses TradeGlobal and Jagged Peak had filed for relief under Chapter 11, a move that will keep the businesses alive as they explore options.
"Under the supervision of the bankruptcy court, the U.S. subsidiaries intend to pursue the sale of all or substantially all of their assets," SingPost said in a statement.
The company said it had tried to sell the U.S. operations during the past six months, but the two non-binding offers it received were "commercially unfeasible." A total of 105 parties had shown interest during the sale process, it added.
SingPost entered the U.S. market in October 2015 when it bought majority stakes in TradeGlobal and Jagged Peak for $184.4 million. The $168.6 million it paid for TradeGlobal was its largest-ever acquisition.
At that time, the Singapore company had a vision of building an e-commerce logistics network and technology platform that would cover Asia, Australia, continental North America and Europe.
TradeGlobal was then described as one of the top five end-to-end e-commerce players in the U.S., offering a full suite of services from website design and content management to fulfilment and logistics.
However, TradeGlobal soon ran into difficulties causing SingPost to take an impairment charge of 185 million Singapore dollars ($134.2 million) in the financial year ended March 2017. An independent review subsequently found the former board did not fully consider certain key risks before signing off on the deal.
SingPost has since written down the value of TradeGlobal and Jagged Peak to zero and the latest development had little impact on the stock, which was unchanged at 93 Singapore cents around 2 pm Singapore time.
The company's share price has fallen more than 50% from its peak in early 2015 as it grappled not only with troubles in the U.S. but also with quality issues concerning its postal services at home. In March this year, the industry regulator imposed a fine of S$300,000 on SingPost for failing to meet standards relating to the delivery of some letters and registered mail in 2018.
Looking ahead, SingPost said it expected to incur professional and administrative fees during the U.S. subsidiaries' Chapter 11 proceedings although the costs weren't expected to be material. It also said it would no longer include Jagged Peak and TradeGlobal in its consolidated financial reports.
For the fiscal first quarter ended June, SingPost reported a 3.9% rise in underlying net profit to S$25.6 million. Losses from the U.S. subsidiaries narrowed to S$6.9 million from S$8.8 million a year ago in the absence of write-downs that were completed at the end of the previous financial year.