Symplr's backers inject $180M as software firm restructures distressed debt
What's the deal? Private equity owners Clearlake Capital GroupDealroom has a profile for this one. Try Dealroom → and Charlesbank Capital PartnersDealroom has a profile for this one. Try Dealroom → have agreed to inject roughly $175 million of preferred equity into healthcare software provider Symplr. The move is part of a broader revamp that creates multiple new debt securities and extends the company's repayment timeline.
Why now? Symplr's debt has traded at distressed levels since concerns over artificial intelligence's growth hit scores of software companies earlier this year. Moody's RatingsDealroom has a profile for this one. Try Dealroom → downgraded the company deeper into junk in July, citing the increased likelihood of a restructuring.
How it works: Clearlake and Charlesbank have agreed to defer interest payments on the new junior-ranking paper to conserve cash. Separately, second-lien lenders including Ares Capital Corp.Dealroom has a profile for this one. Try Dealroom → plan to provide $103.5 million of fresh money, structured as a first-out second-lien loan that ranks ahead of other second-lien debt.
The terms: Lenders to the first-lien term loan due in 2027 will get a 100-basis-point coupon bump in exchange for extending the maturity by three years. Existing second-lien lenders also receive a 100-basis-point bump, with the loan carrying a mix of cash and payment-in-kind interest.
What could go wrong? Investors who don't join the exchange will see their debt fall to the bottom of Symplr's capital structure and lose creditor safeguards known as covenants. The company still needs broader support for the plan, which follows months of talks with lenders.
Symplr's roughly $1.2 billion first-lien term loan was recently quoted at 71.4 cents on the dollar, down from about 86.5 cents in early January. Its nearly $290 million second-lien term loan due in 2028 was quoted at 70 cents.
The signal: Symplr's rescue shows how AI anxiety has spread beyond equity markets into the credit that underpins private equity's software bets. As lenders reprice risk across the sector, sponsors are having to write fresh cheques and rework maturities to keep portfolio companies afloat rather than let them slide into default.
Read more: livemint.com
Image credit: NEC Corporation of America
