Electronic Arts' leveraged buyout is facing pushback from bondholders demanding more cash as part of the deal's financing, according to Game Developer.
The dispute threatens the largest leveraged buyout in history. A consortium led by Saudi Arabia's Public Investment Fund, Silver Lake and Affinity Partners agreed to take EA private for about $55 billion, split between roughly $36 billion in equity and about $20 billion in debt financing, with roughly $18 billion of that expected to fund at closing.
The deal pushes EA's debt load from about $1.49 billion before the transaction to more than $20 billion afterward.
The immediate flashpoint is a group of bondholders holding roughly $1.4 billion of EA debt who have claimed the company is in default and are seeking repayment at 101 cents on the dollar, a change-of-control premium tied to the loss of investment-grade status.
The exact terms now being contested have not been disclosed, but EA launched a tender and consent solicitation for its 2031 and 2051 bonds in February.
It extended the consent deadline multiple times, and later saw Fitch withdraw its bond rating amid the standoff; in March, banks began selling the buyout's $5.75 billion cross-border loan as part of a package that included a $3.25 billion term loan A and $9 billion in secured and unsecured debt.
For game teams, a heavier financing burden raises the stakes around studio budgets, hiring and how much room EA retains to fund live-service support or new intellectual property once the deal closes.
