Dallas-based Cambium Learning lands $2.2 billion direct loan, as private investors replace banks - The Dallas Morning News

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Blackstone Group Inc. teamed up with other lenders to provide $2.15 billion of financing directly to Dallas-based Cambium Learning Group Inc., bypassing banks in one of the biggest such loans that investors have made.

Companies have been getting bigger and bigger loans straight from investors without banks intermediating, as money managers have grown eager to deploy a record $364 billion of funds they’ve raised to provide this kind of financing.

The Cambium deal, known as a unitranche, is the third largest new direct loan on record, according to data compiled by Bloomberg. Cambium, which was bought out in 2018 by private equity firm Veritas Capital, is one of the nation’s leading online education and testing companies.

Blackstone led the $2.15 billion deal that will refinance the company’s existing $1.3 billion loan as part of a broader recapitalization, which also includes $500 million of privately-placed debt, according to a person with knowledge of the matter who isn’t authorized to speak publicly. Blackstone confirmed the size of the loan transaction, which closed this month, without giving further details. Three other lenders provided the unitranche financing, the person with knowledge of the details said.

As recently as 2019, it was rare to see private loans that were larger than $500 million. But as the private credit market has ballooned to a $1 trillion industry — and banks have retreated from lending to mid-sized companies — direct loans have swelled.

Three of the largest new unitranches — each in excess of $2 billion — were signed in the last three months, including a record $2.6 billion loan for Thoma Bravo’s buyout of Stamps.com. Unitranches are loans which combine senior and subordinated debt into a single facility.

Cambium has been a frequent issuer in the leveraged loan market that is mediated by banks. It increased the size of a loan in March to $1.3 billion, paying a spread of 4.5 percentage points over the London interbank offered rate for the add-on. The new debt will refinance this loan, though the pricing details were not disclosed.

Cambium’s deal follows on the heels of the Stamps.com loan, which was provided by Blackstone, Ares Management Corp., PSP Investments and the lending unit of Thoma Bravo.

Earlier this year, Blue Owl predecessor firm Owl Rock Capital Partners, led a $2.3 billion unitranche to help fund the buyout of Calypso Technology Inc. by Thoma Bravo. Other lenders including Goldman Sachs Group Inc.’s private credit investing platform, Thoma Bravo’s credit arm and PSP Investments contributed financing.

Lisa Lee and Olivia Raimonde, Bloomberg

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Dallas-based Cambium Learning lands $2.2 billion direct loan, as private investors replace banks - The Dallas Morning News
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