Private credit firms led by Ares Management are providing a more than US$1.2 billion debt package to software developer CentralSquare Technologies to refinance its debt, according to people with knowledge of the matter.

The financing includes a US$1.1 billion direct term loan that priced at 6 percentage points above the Secured Overnight Financing Rate, and a roughly US$125 million revolver, said the people, who asked not to be identified discussing a private transaction. 

Lenders are also providing a US$330 million of preferred equity that’s expected to yield about 15 per cent, according to the people. It includes a payment-in-kind component that would allow the company to pay some of the interest with more principal rather than cash, the people added. 

Oak Hill Advisors participated in the transaction, they said.

With the fresh capital, the company – backed by Bain Capital and Vista Equity Partners – can refinance debt that includes a US$900 million term loan and a US$380 million second lien loan, according to data compiled by Bloomberg.

CentralSquare is the latest company to refinance broadly syndicated debt with help from private markets, despite the recent rally the leveraged loan market has seen in the past months. In response, private credit lenders have repriced their own loans, fearing they would lose market share to Wall Street banks and collateralized loan obligation managers. 

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Spokespeople for CentralSquare, Bain, Vista, Ares and Oak Hill declined to comment. BLOOMBERG