A cybersecurity company Thoma Bravo bought in 2020 needs a refinancing lenders already rejected once. The firm's recent record, a $5 billion loss of control at Medallia and dozens of concessions ceded on Proofpoint, is the backdrop lenders are negotiating against.
Thoma Bravo is weighing lender-friendly concessions on a $2.1 billion term loan backing Sophos, the cybersecurity company it acquired for $3.9 billion in 2020. The proposed changes include a higher coupon, additional amortization and tighter financial covenants. The loan, due March 2027, is the subject of a refinancing effort that private-credit investors already rejected once despite Thoma Bravo offering a substantial yield increase. Thoma Bravo does not intend to inject additional equity capital into the deal. Instead it is pointing to Sophos's operating performance, including 6% annual recurring revenue growth and a 10% increase in adjusted EBITDA to roughly $120 million in the three months ended June, as the case it wants lenders to accept. The existing loan traded at 96.88 cents on the dollar in mid-August, up from 92.69 cents in February. A refinancing could launch as soon as next month, though terms remain under negotiation.
This is not Thoma Bravo's first encounter with lender resistance this year, and it is far from the firm's worst outcome. In April, Thoma Bravo began negotiating to hand Medallia, a customer-experience software company it bought for $6.4 billion in 2021, over to its lenders entirely. The deal, which closed by mid-June, wiped out roughly $5.1 billion in equity value. Blackstone led the creditor group with a $1.5 billion stake, alongside KKR, Apollo Global Management and Antares Capital, converting their debt into ownership while Thoma Bravo's original equity holders received nothing. Blackstone's global head of private credit, Brad Marshall, attributed the collapse to "execution-driven issues" at Medallia rather than a broader market shift.
Separately, and more recently, Thoma Bravo ceded roughly 40 lender-favorable changes to close a refinancing of Proofpoint's roughly $5 billion debt load, confirmed August 25.
Three portfolio companies. Three different outcomes so far: an outright loss of control, a concession-heavy refinancing, and now a fresh negotiation still in progress. The pattern is consistent. Lenders are extracting real, structural terms from one of the largest software-focused sponsors, specifically where AI-competitive risk is priced into the underlying credit. Sophos's operating metrics, unlike Medallia's, are genuinely growing. The refinancing will answer whether that is enough to avoid the terms Proofpoint's lenders extracted, or whether the discount now applied to sponsor-backed software credits is systemic enough that even a growing business pays it.
Sophos's final terms are not yet public, and the refinancing has not launched. Medallia and Proofpoint are not predictions about where it lands. They are the record of where this sponsor has already landed twice this year on adjacent credits.