Vista and Blackstone improve credit terms for Smartsheet acquisition

(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., people familiar with the matter said.

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

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

Representatives for Vista and Blackstone declined to comment, and Smartsheet did not respond to a request for comment.

Vista and Blackstone officially announced the acquisition on Tuesday after Bloomberg reported on the debt on Monday evening. According to a press release, the companies expect to close the transaction by January 2025, following approvals and a trial period.

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 included a slightly higher interest rate than originally planned, a longer lock-up period and protections against other types of debt maneuvers that lenders have used to play off each other in recent years, one of the people close to the bank said.

The price of the new loan is being negotiated at 6.5 percentage points above the secured overnight rate, according to the same person, compared with an initial offer in the range of 6.25 to 6.5 percentage points above the U.S. benchmark. The company would pay 7 percentage points above the benchmark if it chooses to pay some of the interest in kind, the person said.

Vista has come under fire in recent months after it put some of Pluralsight's intellectual property out of the reach of lenders. Vista eventually wrote off its entire investment in the technology company and handed the keys to a group of lenders who had financed the company's acquisition.

– With support from Paula Seligson.

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(Updates will be provided on an ongoing basis following the official announcement of the merger/acquisition.)

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