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UPDATE 1: CDK Global Co-Op Allows for Potentially Unlimited Carve-Out Premium to Lender Steerco; Different Treatment for Initial Party vs. Subsequent Party in Potential Deal Is Possible
Mon Apr 27, 2026 06:25 PM ET: A cooperation agreement prepared by Gibson Dunn as legal advisor for CDK Global creditors used language to define a carve-out premium to the steering committee that some investors interpret as essentially unlimited, according to sources. Meanwhile, initial parties and subsequent parties may receive different economics in a potential deal, according to sources.
Carve-out premium is defined as any new money, allocation, backstop fee, exchange economics, fees, premiums or other compensations paid to the steering committee, the sources said. Similar language without any qualifiers or adjectives, such as “reasonable” and “customary,” appeared in a cooperation agreement for Foundever lenders.
The difference between initial party and subsequent party also came under the spotlight, after Gibson Dunn notified creditors of a 13.5% cap on initial parties on the evening of April 24 and updated them the next day that the cap had been filled, according to sources.
CDK debt has started to be quoted by trading desks in three categories. For the term loan, 7.25% secured notes and 8% secured notes, the steerco paper is quoted at 60/62, 62/64 and 62/64; the initial party paper is quoted at 57/59, 59/61, 60/62; and non-co-op paper is quoted at 47/51, 52/56 and 54/57, respectively, according to a trading desk.
CDK Global, sponsor Brookfield Business Partners and the advisors involved did not respond to requests for comment.
Original Story 3:03 p.m. UTC on April 27, 2026
CDK Global Co-Op Installs Cap on Initial Party Allowance
The latest cooperative technology: a cap on initial party percentage.
Gibson Dunn and Houlihan Lokey as advisors to an ad hoc group of CDK Global creditors informed debtholders on April 24 that a previous deadline to join a cooperation agreement had been scrapped, and instead only the first creditors who sign on to the co-op until a cap of 13.5% of total debt has been reached will have initial party status, according to sources.
The lender group’s advisors initially set a Tuesday, April 28, deadline for investors to join the united front when the co-op was circulated last week, which had become effective already when a steerco that owned a majority of the debt agreed to the pact, the sources said.
Any creditor who signs on after the 13.5% limit is reached will be a subsequent party to the co-op, the sources said.
In addition, sponsor Brookfield is said to own CDK Global debt, according to sources.
CDK’s co-op paper was quoted in the low 60s today, while non-co-op paper was quoted at about 50 at the midpoint, according to a trading desk.
CDK’s $755 million 8% first lien bond due 2029 fell more than 10 points from April 24, trading down to 55 in the early afternoon hours today, versus 60.25 this morning and 66.25 on April 24, according to TRACE. Its $750 million 7.25% note due 2029 last traded at 52 today, down from 63.75 this morning and 65 on April 24.
Octus reported last week that CDK is working with Weil Gotshal and PJT Partners to engage with its creditors and evaluate options for its balance sheet, including a liability management exercise.
The Brookfield Business Partners-backed software provider to auto dealerships and manufacturers settled two lawsuits regarding antitrust matters and has at least three other ongoing lawsuits related to competition and a 2024 cyberattack.
On April 24, CDK Global moved for partial summary judgment in Tekion’s dealership management system, or DMS, software antitrust suit, arguing that the competitor cannot show that CDK holds monopoly power in the DMS market or that the market is protected by significant barriers to entry. A hearing on the motion is scheduled for June 11.
An estimate of the company’s capital structure as of March 31, 2025, is shown below:
Although broader concerns around AI disruption have weighed on market sentiment, an Octus analysis in February found that near-term credit risk is primarily company-specific, including customer churns, litigation cash outflows and competitive challenges.
CDK Global, sponsor Brookfield Business Partners and the advisors involved did not respond to requests for comments.
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