Athletico Holdings in Talks to Hand Control to Lenders in Debt-to-Equity Swap 

Athletico Holdings is in discussions with its creditors for a deal in which it would cede control of the company through a debt-to-equity swap, according to sources.

The first lien lenders will likely receive $150 million to $200 million of a new take-back debt instrument paying SOFR+650, while the remainder of their debt will be equitized, the sources said. The BDT-backed company had roughly $955 million of senior secured debt outstanding as of June 1, 2025.

The company’s sponsor would retain 5% to 10% of the equity while also contributing new money for debt, along with lenders on a pro-rata basis, to the tune of about $100 million total, the sources added. Athletico is working with Kirkland & Ellis and PJT Partners, while an ad hoc group of lenders is seeking advice from Paul Hastings, Octus reported previously.

The deal is not final, and terms are still being finalized, they said.

Octus reported in April that the company is in discussions with creditors for a pro-rata deal.

The average price of Athletico’s SOFR+450 bps first lien term loan B due 2029, which had $875 million outstanding at issuance, is 50/52 today, down from 57/59 in mid-February, according to IHS Markit.

The physical therapy sector is contending with a labor shortage that has weighed on the profit margins of players such as Athletico in a challenging medical reimbursement environment, the sources said.

Last May, Octus reported that Athletico was expected to close the sale of Pivot Onsite Innovations by June 1 and would use the expected net proceeds to pay down its revolver borrowings. The closing of the transaction was announced on June 2, 2025, for a purchase price of $55 million.

In March 2023, Athletico borrowed $75 million from its sponsor, BDT Capital Partners, to repay most of the outstanding balance on its RCF. The new incremental term loan was issued at 15% PIK interest, Octus previously reported.

Last July, S&P Global Ratings revised Athletico’s credit rating outlook to negative, saying that “the pace of improvement will remain slow, such that the company may not achieve our earlier expectations.” It noted, however, that “the company has sufficient liquidity to fund cash flow deficits for the next 12 months.”

An estimate of the company’s pro forma capital structure as of June 1, 2025, is shown below:
 

Athletico, BDT Capital, Kirkland & Ellis and Paul Hastings did not respond to requests for comment. PJT Partners declined to comment.