In a significant move for the Swiss software company WebPros, private investment firm CVC Capital Partners is currently in discussions with private credit funds to execute a dividend recapitalization. According to a report by Bloomberg citing sources familiar with the matter, CVC is targeting approximately $1 billion through a unitranche facility, which is anticipated to be priced at about 525 basis points over the Secured Overnight Financing Rate (SOFR).
This refinancing initiative aims to replace an existing $540 million leveraged loan issued by WebPros in 2024. By securing this capital, CVC intends to facilitate a dividend payout, thereby extracting cash from WebPros. This strategy highlights a notable shift from traditional leveraged-loan markets towards private credit—a trend that typically sees activity flowing in the opposite direction.
The deal is also expected to include a portability clause, which would provide CVC with added flexibility in the event of a future sale of WebPros. As negotiations are still underway, the terms of the deal may evolve.
The strategic rationale behind this transaction lies in CVC's objective to enhance liquidity for WebPros while simultaneously positioning the company for future growth. By tapping into private credit, CVC can optimize its capital structure and potentially increase shareholder value through the anticipated dividend.
As for the timeline, while specific closing dates have not been disclosed, the ongoing discussions suggest that the refinancing process is progressing. The implications of this deal could resonate throughout the market, potentially affecting WebPros' shareholders and employees by providing immediate financial benefits and a more stable capital foundation for future operations.
Additionally, it is important to consider the regulatory landscape surrounding this transaction. CVC will need to navigate any antitrust or regulatory approvals that may arise during the refinancing process, although no specific regulatory hurdles have been mentioned thus far.
In summary, CVC Capital Partners' engagement in refinancing WebPros signifies a strategic maneuver to bolster the company's financial position while enabling a cash extraction through dividends, with broader implications for both the companies involved and the market at large.