Serta Induces Changes to Open Market Purchase Language in Loan Documentation as Issuers, Sponsors Continue to Push for Maximum Flexibility; Clarios Broadens OMP Provision in Primary Transaction

When the Serta ruling hit on New Year’s Eve, Dotdash Meredith was well prepared because the print and digital publisher tweaked the open market purchase language in its credit agreement a month earlier.

Some leveraged finance lawyers seem to have been pursuing changes to the OMP for some time since the technicality took center stage 4.5 years ago in the litigation challenging Serta’s liability management exercise at the height of the Covid-19 pandemic. If they had not been doing that before the beginning of 2025, they are certainly doing it now.

Wachtell helped Dotdash Meredith secure more flexibility at the end of November 2024 by inserting “privately negotiated and/or” before “open market purchases” in the credit agreement as part of the issuer’s loan repricing, according to an 8-K that detailed the amendment.

American Greetings, a greeting card producer being acquired by Elliott Investment, did not even have to tweak its OMP language in the credit agreement for the transaction because “an open market or other privately negotiated purchase” was already in the existing credit agreement and the wording stays, according to sources. American Greetings is advised by Debevoise, and Elliott is advised by Davis Polk.

Clarios, a vehicle battery manufacturer in the market to fund a dividend, broadened the OMP in its draft credit agreement by adding “which purchases, for all purposes hereunder, may be effected as (and, for the avoidance of doubt, shall be deemed to include) private transactions at any price (and for any form(s) of consideration),” the sources said. Clarios, a Brookfield portfolio company, is advised by Davis Polk as special New York counsel, the sources said.

The loan documentation change on the front end reflects private equity sponsors’ continued effort to adapt to maximize flexibility in preparation for rainy days. A variety of language alternative to “stand-alone OMP” is expected to appear in new and amended credit agreements to leave the door open for future non-pro-rata loan repurchases or exchanges.

In addition, non-pro-rata Dutch auctions may be utilized by issuers, sponsors and required lenders to structure deals. New money in the form of priming debt only open to certain lenders is also expected to appear in some transactions while the market figures out the path forward for non-pro-rata debt exchanges, according to sources.

Dotdash Meredith, Wachtell, American Greetings, Elliott, Debevoise, Davis Polk, Clarios and Brookfield did not respond to requests for comment.

Octus is hosting a roundtable on Thursday, Jan. 16, to discuss where LME is going.

Further Reading: Octus’ Opinion Analysis detailing Serta’s ramifications for non-pro-rata debt exchanges; “The Year in LMEs: Uptiers Down, Drop-Downs Up and Dec. 31 Serta Decision Throws a Monkey Wrench.”