Thoma Bravo is meeting reluctance from private credit providers as it seeks to refinance $2.5 billion of debt connected to cybersecurity company Sophos, according to people familiar with the situation. Several private credit firms have reportedly opted not to take part in the refinancing even after Thoma Bravo increased the yield on the proposed deal.
Faced with that pushback, the private equity firm has brought in Goldman Sachs Group Inc. to explore another avenue - negotiating extensions of loan maturities with Sophos's existing lenders. The move aims to address a looming $2.1 billion loan maturity that Sophos must face in March 2027.
Market participants say private credit lenders have grown more cautious about providing financing to software companies. That caution is driven by concerns about potential disruption from artificial intelligence and the concentration of software assets within private credit portfolios. Observers point out that the heavy weighting of software-related loans in these portfolios has raised questions about whether the loans carry high leverage and could be vulnerable to AI-driven changes.
Sophos, which offers cybersecurity services designed to protect business networks from threats, is among several software companies - many with private equity ownership - whose debt has been affected by lender reticence earlier this year. The current environment marks a reversal from the prior year, when private credit investors were actively pursuing lending opportunities to software borrowers, including Sophos.
Context and implications
The reported unwillingness of some private credit firms to participate, even with higher yields on the table, has led Thoma Bravo to engage a major investment bank to explore maturity-extension alternatives. That reported strategy would rely on cooperation from existing lenders rather than attracting new private credit capital for a full refinancing.
The information available does not provide details on which specific private credit firms declined to participate, nor does it quantify the number or proportion of firms taking that stance. Similarly, the precise terms being discussed with existing lenders through Goldman Sachs have not been disclosed.