EA杠杆收购遭遇债券持有人对抗

Electronic Arts, which recently transitioned from a public shareholder business to one owned by multiple private equity entities, still has creditors to answer to regarding previously-issued bonds, and a showdown with bondholders may be brewing for the publisher.

In August, Electronic Arts finalized a (much-criticized) acquisition by collaborating partners from Saudi Arabia's Public Investment Fund (PIF), Silver Lake, and Affinity Partners, which is led by U.S. president Donald Trump's son-in-law Jared Kushner. To finance the buyout, the consortium borrowed $20 billion from JPMorgan, using that money as leveraged debt on the company.

The expectation then is that Electronic Arts would pay back that debt in the course of regular operations over the years. This is called a leveraged buyout and Electronic Arts holds the distinction of being the largest one of all time.

As The Wall Street Journal reports, however, this has its own complications. In taking on that level of debt from JPMorgan, the leverage increase potentially weakens EA's credit profile, leading to a loss in its investment grade rating. In such a scenario, legacy creditors now in the role of bondholders facing potential declines in bond value can demand that simply paying them back is not good enough and ask for a 101 percent repayment.

One group of bondholders is doing so for two $750 million tranches, totaling $1.5 billion.

To combat all of this, the Journal reports that EA is transforming its bonds into assets that resemble U.S. Treasury securities, essentially splitting the principal and the interest. This apparently has relatively little effect on the leveraged buyout. But it may not stem the tide in the bondholder revolt.

This continues an ongoing disapproval by bondholders for the acquisition after EA failed to buy back all their bonds in time earlier this year, as reported by Bloomberg.

For more details on the dispute, be sure to read The Wall Street Journal's full coverage.

About the Author

Contributor

Imran Khan has been in the games industry in various forms for over two decades. He has been a former senior editor at Game Informer, a professional loudmouth at Kinda Funny, and news director at Fanbyte. He has also been doing PR for Vicarious PR and Head of U.S. PR for Japanese VR studio MyDearest, in addition to Producer work on their latest title Brazen Blaze.