A group of banks, led by BMO, is attempting to relaunch a leveraged loan deal to support HIG Capital’s buyout of Converge Technology Solutions Corp., which resulted in the formation of Pellera Technologies. The banks are in discussions with investors regarding an approximate $850 million leveraged loan. This comes after the initial attempt to sell a $1.1 billion leveraged loan in March failed because credit markets froze in April due to tariff announcements. As a result, the banks had to fund the entire acquisition themselves when it closed on April 22.
Through the acquisition, HIG Capital merged its portfolio company Mainline Information Systems with Converge to create Pellera Technologies. This new entity, headquartered in Tallahassee, Florida, generated approximately $4 billion in revenue in 2024 and focuses on IT solutions in areas like cybersecurity, cloud, digital infrastructure, and AI. Converge CEO Greg Berard is leading Pellera as CEO, with Mainline President and CEO Jeff Dobbelaere as President and COO.
This situation is not unique, as other banks have also faced challenges with debt deals. For example, Wall Street banks had to postpone and fund deals for ABC Technologies Holdings Inc.'s purchase of TI Fluid Systems PLC and Patterson Cos.'s buyout by Patient Square Capital. Subsequently, $2 billion of debt related to the Patterson buyout has been syndicated, and $2.2 billion of ABC Technologies' buyout loans are being offloaded to private credit firms. The remaining portion of the Pellera debt will be held by the banks through a second-out tranche.
