Css attributes

Global tech company Startek announces $30 million investment in CSS Corp

Startek, a global business process management firm, said it invested $30 million in CSS Corp in a limited partnership managed by its majority shareholder, Capital Square Partners.

Startek will both acquire an indirect beneficial interest of approximately 26% in CSS, an IT services and technical support company. Startek said in a statement that it has the option of acquiring a majority stake in CSS without being obligated to do so.

The investment was financed by a new $185 million senior credit facility from CSP Alpha Holdings Pte. Ltd., a wholly owned unit of Startek. This debt refinancing consists of a $165 million term loan and a $20 million revolving credit facility. The term loan has a moratorium on principal repayment for 21 months and will be amortized quarterly thereafter, beginning in November 2022. The loan is subject to certain standard financial covenants. The proceeds of this loan were used to fully repay the previous senior debt facility and also to complete the strategic investment in CSS.

“As we enter 2021, we have further strengthened our commitment to improving the flexibility of our platform. After the fourth quarter, we completed a debt refinancing of $185 million which allows us to extend our debt maturities and improve our overall liquidity position. With this strengthened balance sheet, we can comprehensively support our current operations while capitalizing on strategic opportunities to drive long-term accretive growth,” said Aparup Sengupta, Executive Chairman and Global CEO. by Startek.

He added that the CSS investment represents one such accretive opportunity that will also help accelerate Startek’s digital initiatives. “CSS is a robust IT services company that provides mission-critical AI, automation, analytics, cloud and digital solutions to a growing tech customer base across five continents. Given the success of our omnichannel platform Startek Cloud in 2020, we continue to see our digital services as a key long-term driver of future revenue growth and margin expansion Our investment in CSS accelerates our digitization initiatives and marks an inflection point important for Startek,” Sengupta said.

Startek employs over 18,000 people in India at BPM centers and 40,000 in 13 countries.

Startek also announced fourth quarter results, for the quarter ended December 31, 2020. Net revenue for the quarter was $174.5 million, an increase of 4.7% over to the previous year, due to high demand and strong seasonality within the company’s existing customer network.

Net loss attributable to Startek shareholders in the December quarter was $7.6 million, compared to a net loss of $5.3 million in the prior year quarter. The net loss in the fourth quarter of 2020 included an impairment of approximately $13.2 million of goodwill due to expected Covid-19 related declines in the company’s operations in India, South Africa and Australia and Argentina due the devaluation of the local currency.

Gross profit in the fourth quarter increased 11.7% year on year to $30.9 million. Gross margin increased 160 basis points to 17.7% from 16.1% in the prior year quarter. The margin increase was attributed to its existing customer base and a broader revenue mix of high-margin digital services. Margin expansion was also aided by additional grants of $2.7 million received in the fourth quarter.

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