As concerns about the AI-related market intensify, Thoma Bravo accepted about 40 additional conditions in refinancing Proofpoint's debt and extended the repayment deadline on its borrowings by 2 years.
Thoma Bravo, a major US private equity firm, saw the number of amendments to the financing for its acquisition of Proofpoint grow from an initial 12 to about 40 during 9 days of negotiations. The changes included tighter restrictions on future borrowing and regular conference calls to review the company's situation.
Thoma will pay an additional $60 million in interest annually to extend the repayment deadline by 2 years on most of the $5 billion in financing.
With approximately $9 billion of debt at its portfolio companies due for repayment by the end of 2028, Thoma's negotiations with Proofpoint kept the debt covenant-lite and required no new equity injection. Market participants say the negotiations could serve as a blueprint for the difficulty of future refinancings.
While concerns about AI's impact on SaaS investments are spreading, activity in the refinancing market has slowed. A Harvard Business School expert pointed to declining investment appetite, and the Thoma case could affect other private equity firms as well. Sophos faces the maturity of more than $2 billion in debt in March, and Moody's downgraded its rating to B3. In response, Thoma is exploring financing in the broader syndicated loan market.