GSO, Guggenheim, MidOcean bid for Aspect Software equity

  • Golden Gate exiting Aspect Software in Chapter 11 reorganization
  • Aspect carrying $795 mln in debt
  • Plan to reduce debt by $320 mln, inject $60 mln in equity

Golden Gate Capital would lose its equity in Aspect Software if a restructuring plan is approved by creditors and a bankruptcy judge.

GSO Capital Partners, Guggenheim Partners and MidOcean Credit would emerge with the equity in Aspect Software, a call-center-technology company, as part of its $380 million bankruptcy reorganization, according to court documents.

For Golden Gate, the deal would mark the end of more than a decade with the company and its predecessors.

Aspect Software negotiated with creditors for a deal that allows it to continue its move to a cloud-based model under CEO Stew Bloom, who joined the company at the end of 2012.

“By resetting our capital structure and dramatically improving our balance sheet, we will be well-positioned to compete over the long-term while continuing to accelerate investments in our product and service capabilities,” Bloom said March 9 in a prepared statement.

Aspect Software reached an agreement with GSO, Guggenheim and MidOcean on a restructuring that will eliminate about $320 million of second-lien debt. The deal also calls for GSO, Guggenheim and MidOcean to refinance $60 million of first-lien claims and receive 100 percent of the equity in a reorganized Aspect, according to the filing.

It also lined up $30 million in debtor-in-possession financing, a type of credit companies use to continue to operate during a reorganization.

A spokesman for Aspect Software referred comments to Golden Gate; a spokeswoman there declined to comment. Spokesmen for GSO, Guggenheim and MidOcean also did not comment.

Aspect Software filed a Chapter 11 bankruptcy petition on March 9, after struggling with annual cash interest payments of about $34 million on $475 million of first-lien secured debt and $320 million of second-lien secured debt.

Golden Gate is listed as a creditor for Aspect Software for $4.8 million, according to the bankruptcy filing. The firm is the second-largest creditor after U.S. Bank NA of Philadelphia, which filed a $320 million claim in second-lien notes, according to the filing.

Moody’s Withdrew Ratings

Citing the bankruptcy filing, Moody’s withdrew its ratings on Aspect Software on March 14.

The company was operating under a debt-to-Ebitda multiple of 8x based on the 12 months ended September 30, Moody’s said in a December 8 research note. Analyst Matthew Jones said he expected the company’s Ebitda and revenue to return to growth over time, but “the timing of that growth is uncertain.”

In 2004 Golden Gate Capital teamed up with Oak Investment Partners to buy a predecessor to Aspect Software in the call-center space. In 2005, Golden Gate platform company Concerto bought Aspect Software and took its name.

All told, Golden Gate Capital has invested in or bought more than 60 software companies with combined revenue topping $7 billion, according to a statement from the firm.

Action Item: Aspect Software’s Chapter 11 filings can be accessed here,

Photo courtesy of ShutterStock