Sungard Availability Services is preparing to file for bankruptcy but the data protection service provider will emerge from the process as a much stronger company, Sungard AS CEO Andrew Stern asserts.
In a prepared statement, Stern said:
"A diverse group of lenders came together very quickly, reaching an agreement that results in an appropriate capital structure that enables us to continue focusing on operating and growing our business. Our creditors recognize the value in what we've built, and are investing new capital into the business. Sungard AS will emerge from this process as a much stronger company, continuing to service existing and new customers well into the future."
The company currently has about $1.3 billion in debt, but would emerge from bankruptcy with about $400 million in debt on its balance sheet, according to Bloomberg. The pre-packaged bankruptcy filing should arrive around May 1, Sungard AS says.
Sungard AS: What Went Wrong?
Like many client-server, remote and on-premises data protection companies, Sungard AS fell on hard times as customers increasingly shifted workloads to cloud backup options from Amazon Web Services (AWS), Microsoft Azure and other public cloud options.
Amid that market shift, Sungard AS also suffered from a big debt load under six private equity owners:
- Bain Capital
- Blackstone Group
- Providence Equity Partners
- KKR & Co.
- Silver Lake Management
- TPG Capital.
The bankruptcy plan will apparently shift control of Sungard AS to hedge fund investors, including Angelo Gordon & Co., Blackstone Group’s GSO debt investment unit and Contrarian Capital Management, Philly.com reports.
Sungard AS is not to be confused with former parent SunGard Data Systems, which Fidelity National Information Services Inc. has owned since 2015.