In its latest credit agreement, Thoma Bravo included a provision requiring lenders to notify the sponsor within three business days of entering into cooperation agreements with other creditors.
For lenders funding the $1.2 billion term loan backing portfolio company Majesco’s acquisition of cloud software provider Vitech, any failure to self-report results in a loss of voting rights on matters such as amendments to the credit agreement or covenant waivers.
Join the more than 60,000 industry professionals who rely on our newsletter
Lender cooperation agreements have become an increasingly common defense against aggressive liability management exercises — a coordinated group of lenders can prevent sponsors from picking off individual lenders or arranging priming transactions.
Thoma Bravo’s provision is designed to give the firm an edge in any potential distressed situation.
By requiring disclosure, Thoma Bravo gains advance notice of any lender coordination, giving the firm an opportunity to preempt any collective action before momentum builds.
Some creditors, however, view the clause as having limited practical force. Because it’s a notification obligation rather than an outright prohibition on cooperation agreements, lenders still retain the right to organize, just without the element of surprise that can make coordination more valuable.
The Majesco financing totaled around $1.3 billion, comprising the term loan and a $100 million revolving facility. The deal, which closed in early January, was priced at SOFR + 450 with a step-down to 425 and includes lenders Oak Hill Advisors, Antares Capital, Morgan Stanley Private Credit, Golub Capital, Francisco Partners, and Octagon Credit Investors.
Beyond pricing, the facility’s structural features reflect the leverage sponsors are currently enjoying in financing processes: it’s covenant-lite, non-amortizing, and includes a PIK option.
Borrowers are benefiting from a private credit universe that has become increasingly competitive for lenders—a market dynamic that opens the door to abnormally borrower-friendly documentation, such as Thoma Bravo’s notification provision.
In these situations, lenders are left to figure out the right balance between self-protection through appropriate covenants and LME blockers, while minimizing the number of deals lost to competitors willing to accept less favorable terms.