Blackstone-led private credit firms are taking control of the software company Medallia, converting a significant portion of their $2.8 billion debt into equity. This restructuring effectively wipes out the approximately $5.1 billion in equity that Thoma Bravo and its co-investors had in Medallia since taking it private in 2021. The move comes after Medallia's debt load, which had swelled to nearly $3 billion, became unsustainable, and lenders refused to extend further flexibility on interest payments.
The lenders, including Blackstone (with a $1.5 billion stake), Apollo, KKR, and Antares Capital, are stepping in after months of signaling concerns. Thoma Bravo acquired Medallia for $6.4 billion in 2021. The private credit lenders had previously allowed Medallia to pay a portion of its interest by borrowing more, a practice known as Payment-in-Kind (PIK), but this arrangement expired at the end of 2025, and lenders declined to extend it. This decision forced Medallia into a distressed credit restructuring.
Medallia's debt has been marked down significantly by various lenders in the past months. For instance, Blackstone marked down the value of its first-lien debt to 60 cents on the dollar as of March 31, from about 78 cents in Q4. Other lenders like Antares had marked it at 84 cents, and KKR, HPS, and Monroe at about 78 cents in Q4. This restructuring marks a significant shift in private credit, with lenders evolving from passive financiers to active operators of distressed software assets.
