Veritas-Backed Software Firm Seeks $5.7 Billion Debt Refinancing

Gainwell Technologies LLC is in discussions with investors to replace almost $5.7 billion of leveraged loans, a deal that would be the biggest refinancing from the beleaguered US software industry this year.

JPMorgan Chase & Co. is working with the healthcare technology provider to address about $4.2 billion in first-lien debt and a riskier second-lien loan of approximately $1.5 billion, according to people with knowledge of the matter.

Gainwell is weighing a high-yield bond and leveraged loan sale to replace its first-lien debt, while the second-lien loan could be refinanced with existing lenders, the people said, asking for anonymity as the discussions are private.

A spokesperson for Gainwell couldn’t provide immediate comment. A representative for JPMorgan declined to comment, while a representative for Gainwell’s private equity owner Veritas Capital Fund Management LLC didn’t respond to requests for comment.

Gainwell’s potential refinancing is another test of investor appetite for technology borrowers, which together have about $92 billion in leveraged loans coming due by 2028. That’s almost a third of the total $300 billion in US leveraged loans maturing that year.

Already, private equity-owned software businesses are having to pay higher costs and accept shorter-term extensions as investors continue to fret about AI disruption. If successful, Gainwell’s refinancing in the US loan market would be the largest to come out of the sector since the “SaaSpocalypse” selloff earlier this year.

Read More: Traders Rush to Dump Software Loans That Began Year at 100 Cents

Last month, Thoma Bravo’s Imprivata Inc. was forced to increase the rate on its $1.2 billion loan to 3.75 percentage points over the US benchmark from 3 percentage points, for a two-year extension to December 2029. The private equity owner is now trying to extend the maturity on about $5 billion in loans for its cybersecurity business Proofpoint.

Gainwell, which builds software for government health programs like Medicaid, tapped the US leveraged loan market to fund its acquisition by Veritas in 2020. It returned to the loan market just six months later to raise $1.8 billion to purchase another healthcare technology company called HMS Holdings Corp.

Moody’s Ratings ranks Gainwell seven notches below investment grade at Caa1. In a note published in June, the agency wrote that the company faced “elevated” refinancing risks because its first-lien loan matures next year.