A consortium of private credit lenders, led by Blue Owl Capital and Ares Management, has taken control of Pluralsight, wiping out $4bn that Vista Equity Partners and its co-investors have invested in the company since acquiring it three years ago, according to a report by Bloomberg.
The deal for the troubled software company comes after months of intense negotiations.
The report cites unnamed insiders with knowledge of the situation as revealing that the restructuring involves a fresh capital injection of approximately $275m from the lenders, with $125m already funded this week. The agreement will also see the conversion of roughly $1.2bn of Pluralsight’s debt into equity, giving the lenders a controlling 85% stake in the company. The remaining 15% equity will be retained by Pluralsight’s management.
Pluralsight attracted attention earlier this year when some of its assets were moved to a subsidiary to secure new funding – a move reminiscent of aggressive strategies common in the broadly syndicated loan market. This incident underscored the growing tension in the private credit sector, where lenders have prided themselves on more stringent documentation and cooperative dealings in times of distress.
Other major players involved in the restructuring include Ares Management Corp, Oaktree Capital Management, Benefit Street Partners, BlackRock, Guggenheim Investments and Goldman Sachs Group’s asset management arm.
Vista Equity Partners purchased Pluralsight in 2021, during a period when software companies were fetching high valuations. However, by late 2023, Pluralsight began struggling under the weight of rising interest rates, increased competition, and weakening demand, leading to significant strain on its debt-heavy balance sheet.
