Blackstone, Audax Mark Loans to Discovery Education in 70s; K-12 Spending, AI Disruption Add Valuation Risk to Education Technology Sector

Credit Research: Lexie Wang Relevant Item:Octus’ BDC Database Business development company, or BDC, lenders to Discovery Education, which operates primarily as a provider of supplemental K-12 digital curricula, have written down the value of their loans to the mid-to-high 70s as a percentage of par, according to Octus’ BDC Database. As of the first quarter of 2026, BDCs reported holding $758.1 million across all funded instruments, including the first lien term loan, revolver and delayed-draw term loan, of Discovery Education. Octus estimates that Discovery Education had about $1 billion in debt as of March 31. The company’s capital structure, which is based on S&P’s LoanX database and includes original issue amounts adjusted for additional PIK interest, is below: Blackstone is the leading investor, with a total position of $753.2 million. Its managed funds have marked their first lien position at 79.5% of par, representing a 3.8% drop from the previous quarter. Notably, the revolver was written down to 53.9% of par, a 21% decrease since the previous quarter. It is unclear whether the revolver is secured by different collateral or why Blackstone wrote down the value of the revolver meaningfully below its term loan positions. Meanwhile, Audax Credit BDC has marked its[...]