Lenders to Tungsten Automation, a software company owned by Clearlake Capital Group and TA Associates, have entered into a cooperation agreement. This agreement comes amidst growing concerns regarding Tungsten Automation's financial performance and its ability to manage its $1.5 billion debt load. The pact typically prevents individual creditors from taking action that could harm the broader group, often a precursor to debt restructuring efforts.
The company is reportedly facing increased scrutiny from creditors due to its software offerings being potentially vulnerable to disruption from artificial intelligence (AI). This concern for AI's impact on software businesses echoes recent actions by Ares Management Corp., which marked down loans to three other Clearlake-owned software companies—Cornerstone OnDemand, Symplr, and DigiCert—by 13 to 18 cents on the dollar in the first quarter of this year.
The signing of this cooperation agreement follows similar moves in other Clearlake-backed entities. Earlier this year, Clearlake-owned Perforce Software reached a deal with junior lenders to swap existing debt for $297 million in new notes maturing in 2031, providing more time for repayment. Additionally, Pretium Packaging, another Clearlake portfolio company, restructured its debt with a majority group of lenders in January to continue operations. Lenders to Solera and CDK Global have also recently inked comparable cooperation pacts as their financial conditions drew concern.
