(Bloomberg) -- Citrix Systems Inc. bankers are doing whatever it takes to get one of the biggest buyout financings of the past decade off their books, pitching investors a revised $15 billion deal to help limit potential losses as the credit market thaws.
The banks, which are holding pre-marketing discussions with investors this week, are gauging interest in a new potential $500 million-equivalent leveraged loan denominated in euros, according to people with knowledge of the matter.
The expected secured bond portion of the financing is now $3 billion in size, said the people, who asked not to be identified discussing a private transaction, lower than the original debt commitments of $4 billion, according to a January filing.
The revised structure is the latest iteration of the large financing package as the group of banks led by Bank of America Corp. seek to capitalize on the recent credit rally that’s provided an opportunity -- possibly a narrow one -- to offload the debt.
The formal launch of the deal, which may still change, is expected after the US Labor Day holiday on Sept. 5.
Representatives for Credit Suisse Group AG, which is leading the secured bond, and Goldman Sachs Group Inc., which is leading the unsecured bond, declined to comment. Representatives for Bank of America Corp., which is leading the loan portion, and Citrix didn’t immediately respond to requests for comment.
Steep Discount
Bankers have already revamped other parts of the deal to make it easier to sell, Bloomberg previously reported.
The cohort had originally promised to provide the financing that will help support the buyout of the software company by private equity firms Vista Equity Partners and Elliott Investment Management back in January. The original plan was to offload the debt via the high-yield bond and leveraged loan markets, but a deterioration in credit conditions over the following months limited banks’ ability to do so.
Representatives for Vista and Elliott declined to comment.
Syndicating the entire financing at current market yields would likely force lenders to incur losses, and may be too large for the market to absorb even as the tone has improved.
To help soften the blow, the banks may hold $3.5 billion of the original $7.05 billion loan commitment. Depending on demand for the broadly syndicated loan portion of the financing, they may be able to decrease that amount to $2.5 billion or even lower, Bloomberg previously reported.
Read more: Junk Debt Rebranding Lets Banks Hold Onto Hard-to-Shift Loans
Like many loan offerings supporting buyouts, the Citrix deal is expected to come at a steep discount to help drum up demand.
Early pricing indications on a $4.05 billion loan portion to be sold to institutional investors has been floated at a margin of 450 basis points over the Secured Overnight Financing Rate and a discounted price in the low-90 cents range, the people said. The discussions are preliminary and could also change. About $1 billion of that has already been placed with private-credit lenders, they added.
The $3.95 billion of unsecured bond debt commitments have been turned into a second-lien loan, the people added. The debt financing also includes a $1 billion revolving credit facility, according to the January filing.
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