BofA Starting Fresh Talks with Investors on Citrix Buyout Debt

Davide Scigliuzzo, Jeannine Amodeo and Lisa Lee, Bloomberg News

Citrix headquarters in Santa Clara, California, U.S., on Wednesday, Jan. 19, 2022. Elliott Investment Management and Vista Equity Partners are in advanced talks to buy software-maker Citrix Systems Inc., according to people familiar with the matter. , Bloomberg

(Bloomberg) -- Bank of America Corp. plans to start fresh talks with investors on Monday to sell parts of a $15 billion debt financing for the buyout of Citrix Systems Inc., a deal that has been difficult for underwriters to offload.

The preliminary discussions are expected to focus on the secured portion of the financing ahead of official sales, or syndications, that could launch right after the US Labor Day holiday in early September, according to people with knowledge of the matter who asked not to be identified when discussing a private transaction.

Banks have been trying for weeks to figure out how to make the debt sale attractive to investors. The general syndication for Citrix is expected to include term loans in euros and US dollars as well as secured bonds, the people said.

The underwriters are expected to retain some of the secured debt, and around $4 billion of unsecured, in an effort to avoid realizing losses on some of the holdings, according to the people. Hanging onto the debt will also reduce the total that they have to sell, making the syndication process easier.

The Citrix transaction is one of the biggest buyout debt deals that banks still have to unload. The financing, underwritten by a group of lenders led by Bank of America, Credit Suisse Group AG and Goldman Sachs Group Inc. toward the start of the year, has become a thorn in the side for much of Wall Street as prices have dropped for a wide range of risky assets, bringing losses to banks.

Vista Equity Partners and Elliott Investment Management agreed in January to take Citrix private in a deal valued at $16.5 billion, including assumed debt, and to combine it with Vista portfolio company Tibco Software.

Representatives for Bank of America, Credit Suisse, Goldman Sachs, Vista and Elliott declined to comment.

The euro-denominated portion is expected to be small and may eventually be dropped depending on demand, according to one of the people familiar. Banks have also discussed the possibility of replacing the unsecured debt with second-lien loans if conditions in the junk-bond market remain difficult, though no final decision has been made, the person said.

While banks have informally sounded out investors about the Citrix deal before, the discussions starting next week would be the first since Citrix reported second-quarter earnings at the end of July.

(Adds details of euro tranche, discussions on second-lien loan in 8th paragraph.)