Key Takeaways
- • Clearlake Capital and Charlesbank Capital Partners are injecting approximately $175 million of preferred equity into Symplr as part of a comprehensive debt restructuring to extend repayment timelines and preserve cash.
- • Ares Capital Corp. is committing $103.5 million in new money via a first-out second-lien facility that will rank ahead of remaining second-lien debt, with interest paid through a combination of cash and payment-in-kind arrangements.
- • Existing second-lien lenders will receive a 100 basis point coupon increase, while first-lien term loan holders due 2027 can consent to a three-year maturity extension in exchange for an additional 100 basis point coupon bump and tighter lender protections.
- • The recapitalization addresses Symplr's leverage position by reorganizing the debt stack into multiple tiers and deferring interest on new junior-ranking securities to improve near-term cash flow.
- • Investors declining participation in the exchange will see their claims subordinated to the bottom of the capital structure and lose covenant protections, creating pressure for creditor consensus.
Summary
Symplr Software, a healthcare operations and workforce management platform, is executing a significant debt restructuring supported by its private equity sponsors Clearlake Capital Group and Charlesbank Capital Partners. The sponsors have committed to inject approximately $175 million of preferred equity into the company, alongside a reorganized debt stack designed to extend maturity profiles and reduce near-term cash demands. The transaction represents a concerted effort among multiple creditor constituencies to reset the company's capital structure and buy additional runway for operational improvements.
The restructuring involves a layered approach to debt relief and new capital commitments. Ares Capital Corp., functioning as lead new-money lender, will provide $103.5 million through a first-out second-lien facility that receives priority over existing second-lien obligations. This tranche will accrue interest through a hybrid payment structure combining cash interest with payment-in-kind arrangements, a common liquidity preservation mechanism in stressed situations. Existing second-lien lenders are receiving a 100 basis point coupon increase as compensation for subordination, while holders of the first-lien term loan maturing in 2027 are incentivized to extend maturity by three years in exchange for an identical 100 basis point increase and enhanced covenant protections.
The restructuring terms reflect typical creditor negotiation dynamics in leveraged software recapitalizations. To preserve immediate cash availability, Clearlake and Charlesbank are deferring interest payments on newly issued junior-ranking securities, effectively prioritizing liquidity preservation. Creditors participating in the exchange benefit from enhanced documentation and lender safeguards; those electing not to participate face significant structural penalties, including subordination to the bottom of the capital stack and loss of covenant protection. This carve-out incentivizes broader creditor participation while preserving leverage for the sponsors' preferred equity investment.
The transaction required agreement from multiple lender constituencies, including second-lien groups and term loan holders, underscoring the coordination complexity typical of software company recapitalizations. Sources indicate that sponsors and creditors have reached preliminary terms, though broader market support among additional lender cohorts remains under cultivation. The structure preserves sponsor control while distributing the burden of deleveraging across the creditor base through coupon adjustments, maturity extension, and subordination mechanics.
The restructuring involves a layered approach to debt relief and new capital commitments. Ares Capital Corp., functioning as lead new-money lender, will provide $103.5 million through a first-out second-lien facility that receives priority over existing second-lien obligations. This tranche will accrue interest through a hybrid payment structure combining cash interest with payment-in-kind arrangements, a common liquidity preservation mechanism in stressed situations. Existing second-lien lenders are receiving a 100 basis point coupon increase as compensation for subordination, while holders of the first-lien term loan maturing in 2027 are incentivized to extend maturity by three years in exchange for an identical 100 basis point increase and enhanced covenant protections.
The restructuring terms reflect typical creditor negotiation dynamics in leveraged software recapitalizations. To preserve immediate cash availability, Clearlake and Charlesbank are deferring interest payments on newly issued junior-ranking securities, effectively prioritizing liquidity preservation. Creditors participating in the exchange benefit from enhanced documentation and lender safeguards; those electing not to participate face significant structural penalties, including subordination to the bottom of the capital stack and loss of covenant protection. This carve-out incentivizes broader creditor participation while preserving leverage for the sponsors' preferred equity investment.
The transaction required agreement from multiple lender constituencies, including second-lien groups and term loan holders, underscoring the coordination complexity typical of software company recapitalizations. Sources indicate that sponsors and creditors have reached preliminary terms, though broader market support among additional lender cohorts remains under cultivation. The structure preserves sponsor control while distributing the burden of deleveraging across the creditor base through coupon adjustments, maturity extension, and subordination mechanics.
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