Protection file

Riverbed Tech files for bankruptcy (Chapter 11) • The Register

Riverbed Technology has filed for Chapter 11 bankruptcy to implement a “prepackaged” financial restructuring plan to eliminate $ 1.1 billion in debt from the struggles caused by the pandemic.

SD-WAN and WAN Optimization Firm First Signaled Intent to Enter into Restructuring Support Agreement last month, which it says is fully supported by all of its voting lenders, as well as private majority shareholders, Thoma Bravo LLP and the Ontario Teachers’ Pension Plan (OTPP).

In court papers [PDF] Filed with the US Delaware District Bankruptcy Court, Riverbed Chairman and CEO Dan Smoot said the “best option” was to “resize its capital structure and position itself for long-term success.” .

“Like many similar companies, Riverbed faced significant headwinds related to COVID-19 in 2020, including global supply chain disruptions and labor shortages, which negatively impacted performance. of Riverbed, ”Smoot said in supporting document [PDF]. “With factories closing and door-to-door orders being introduced around the world, Riverbed has faced challenges in maintaining its global supply chain and driving sales through a suddenly entirely remote sales force. . “

Limitations caused by the pandemic and the debt obligations – it was bought by Thoma Bravo and OTPP in late 2014 for around $ 3.6 billion – “have severely limited liquidity until 2020,” the CEO added.

In addition to these challenges, one of Riverbed’s key markets – the WAN optimization market – has seen a general decline in recent years as organizations transition to alternative IT technologies independent of the location. “

The company, which employs 1,400 people and sells to more than 30,000 customers, said that “the continued decline in workforce participation and the decline in demand during the pandemic for the products and services of Riverbed “kept the pressure on liquidity, leading to the exploration of efforts to reduce its debts to its owners.

“After lengthy arm’s-length negotiations, Riverbed and these key stakeholders (senior and second-tier lenders and equity sponsors) have come to an agreement on the comprehensive deleveraging and liquidity enhancement transactions set out in the ‘structuring support agreement.

Riverbed To Halve Its $ 2 Billion Debt Through Financial Restructuring, Says reports. Control over debt equity will be transferred to junior lenders and senior loan ratings will be converted to new debt and senior equity, the court record says.

The financial arrangement will provide Riverbed with an additional “cash injection” of $ 35 million. General unsecured claims – including commercial, supplier and employee claims – will be “unscathed and restored,” according to court documents.

In a press release, Smoot noted:

Apollo Partner Chris Lahoud noted: “We are delighted to continue our long-term support for Riverbed in this next chapter as they strengthen their financial position to deliver industry-leading performance and visibility solutions to businesses around the world.

“Riverbed has an exceptional team and strong market opportunities, and we are confident in their strategy to deliver innovative customer solutions and long-term profitable growth. “®