Elliott, Carlyle Help Fuel Goldman Push to Offload Citrix Debt

Elliott Investment Management and Carlyle Group are among the investors that have placed orders for a $3.84 billion slug of debt backing the buyout of Citrix Systems Inc., which a group of banks are offering to unload at a steep discount, according to people with knowledge of the matter.

(Bloomberg) — Elliott Investment Management and Carlyle Group are among the investors that have placed orders for a $3.84 billion slug of debt backing the buyout of Citrix Systems Inc., which a group of banks are offering to unload at a steep discount, according to people with knowledge of the matter.

Both firms are among investors that committed to purchasing part of Citrix’s second-lien debt before banks launched the bond sale on Monday, said the people, who asked not to be named discussing a private transaction. Banks received a number of advance orders before the sale began, the people added.

For Elliott, the debt deal would mean buying back a chunk of debt that the banks underwrote to finance its $16.5 billion buyout of Citrix alongside Vista Equity Partners in January 2022. The banks were later stuck holding the debt when loan prices plunged in the wake of Russia’s invasion of Ukraine, rampant inflation and steep interest-rate hikes. Elliott made a similar move in September by buying about $1 billion of Citrix’s first-lien junk bonds from the banks.

Carlyle is also expanding its holdings after it previously invested around $750 million in the Citrix buyout debt in September along with other debt that got stuck on banks’ balance sheets, Bloomberg reported.

Representatives for Elliott and Carlyle declined to comment.

Banks led by Goldman Sachs Group Inc. kicked off the sale of the second-lien bonds on Monday after months of holding the debt on their balance sheets. Last year, money managers became reluctant to purchase risky buyout debt amid recession fears, leaving banks with losses. A representative for Goldman also declined to comment.

The second-lien bonds have a coupon of 9% and a heavily discounted price of 78 cents, Bloomberg reported. That’s an all-in yield of roughly 14%. In all, Wall Street banks are poised to realize at least $1.3 billion in losses on Citrix debt offloaded last year and this year.

Banks originally provided $15 billion of debt financing for the buyout, but only managed to sell $8.55 billion of bonds and loans at rock-bottom prices before the transaction closed. They have pared that amount over the past few months, including a €250 million ($271.6 million) portion offloaded earlier this year.

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