Vista, Blackstone Sweeten Debt Terms for Smartsheet Buyout

(Bloomberg) — Vista Equity Partners and Blackstone Inc. have made several concessions to a group of private lenders backing their $8.4 billion acquisition of software maker Smartsheet Inc., according to people with knowledge of the matter.

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The buyout firms have agreed to include key creditor safeguards in a $3.2 billion debt package supporting the Smartsheet acquisition after their initial proposal faced pushback from potential lenders, said the people, who asked not to be named discussing a private transaction.

The new terms include provisions that would prevent a controversial type of asset transfer that Vista used earlier this year with Pluralsight, a struggling software company in its portfolio that was ultimately turned over to lenders in August.

Representatives for Vista and Blackstone declined to comment, while Smartsheet didn’t respond to a request for comment.

Vista and Blackstone formally announced the acquisition on Tuesday, following Bloomberg’s report about the debt on Monday night. The firms expect to close the transaction by January 2025 following approvals and a go-shop period, according to a news release.

The debt financing includes a $2.9 billion recurring revenue loan and a $300 million revolving credit facility, Bloomberg previously reported.

Other concessions Vista and Blackstone made to lenders include a slightly higher interest rate than originally targeted, a longer non-call period as well as protections against other kinds of debt maneuvers that have pit lenders against each other in recent years, one of the people said.

Pricing on the new loan is being discussed at 6.5 percentage points over the Secured Overnight Financing Rate, compared with an initial ask in the range of 6.25 to 6.5 percentage points over the US benchmark, according to the same person. The company would pay 7 percentage points over the benchmark if it elects to pay part of the interest in kind, the person said.

Vista has come under scrutiny in the last few months, after it moved some of Pluralsight’s intellectual property outside lenders’ reach. It ultimately wrote down its entire investment in the technology workforce company and handed over keys to a group of lenders that had helped finance the company’s buyout.

–With assistance from Paula Seligson.

(Updates throughout following the formal announcement of the M&A.)