Anthology to raise $250m in LME and orchestrate series of exchanges

Shubham Saharan
+Rachel Butt

23 April 2024•2 min read

Anthology launched a liability management deal negotiated by an ad hoc group of first lien lenders, according to 9fin sources.

The deal for the Veritas-backed company entails raising $250m in new first out debt at a 98 OID, and exchanging existing first lien debt into a combination of new first out and second out debt with tightened documentation, sources said. The deal anticipates a potential for further exchanges of the existing second lien term loan into third out debt. Any first and second lien lenders who do not participate in either transaction would potentially effectively become fourth and fifth out, respectively.

The cash infusion and exchange comes as the company continues to face liquidity concerns amidst high customer turnover and intense competition in the higher education software space.

According to the most recent ratings reports, as of December, the company had a $140m revolver due 2026, a $772m term loan due 2027 and $500m of second lien debt due 2028. The first lien term loans were quoted in the low 40s and the second liens in the mid-20s, according to recent trader runs and 9fin data.

Specifically, first lien holders who participate can exchange on a pro rata basis into an additional $140m in first out paper (pari with the new money), with the remainder of the holdings of those who participate exchanged into second out at a discount, the sources added. All first lien lenders are eligible to participate, they said. According to one of the sources, the balance on the existing revolver will be paid down and the revolver capacity will exchange into a priority revolver.

The resulting structure will leave roughly $300m of third out capacity to pursue further exchanges of the second lien debt, sources said.

Anthology is but the latest company to attempt a debt maneuver that is seen as aggressive to certain creditors, but not aggressive enough for them to threaten to fight the transaction in court. Other recent examples include EyeCare Partners, which announced a similar exchange last week.

Boca Raton, Florida-headquartered Anthology is a product of the combination of four education technology companies: Blackboard, Campus Management, Campus Labs and iModules.

Anthology is reportedly advised by PJT. An ad hoc group of first lien lenders is represented by Davis Polk and Lazard.

Representatives at Anthology and Veritas Capital did not respond to requests for comment.