Paul Singer’s hedge fund Elliott Investment Management has disrupted a $4bn debt restructuring at Veritas Holdings, a software business owned by global private investment firm Carlyle Group, according to a report by the Financial Times.
In a recent securities filing, Veritas disclosed that negotiations with a group of creditors led by Elliott had hit an impasse over the maturity date of its 2025 debt. Elliott, leveraging its position as a major debtholder, is pushing for terms that could potentially extract significant gains.
The conflict stems from Carlyle’s move in February to spin off a division of Veritas and merge it with Cohesity, a private AI software company backed by SoftBank, Sequoia Capital and Brian Sheth. This merger was intended to refinance Veritas’s debt without tapping into Carlyle’s aging fund, which lacks sufficient liquid assets.
Veritas has proposed a multi-step debt repayment and exchange offer aimed at satisfying creditors holding $2.5bn in loans and $1.8bn in bonds, ensuring repayment at nearly full value. In contrast, Elliott and its allies, holding more than half of Veritas’s debt, argue that the restructuring terms offered fall short of equitable compensation.
Elliott contends that Veritas’s proposal includes less than 60 cents on the dollar in cash repayment, with the remainder relying on assets of uncertain value. The activist is pressing Carlyle for additional upfront cash and a greater allocation of remaining assets.
In response, Veritas described its offer as “highly constructive” in its securities filing.
According to the FT, Carlyle remains optimistic that cooperation from other creditors such as BlackRock, Pimco, Canyon Partners and Michael Milken-funded Silver Rock Financial could help bridge the divide, though Elliott and its allies have already formed their own “co-operation agreement” against Veritas and Carlyle.
