Constellation Software’s Accumulation of Sabre Common Stock Places Spotlight on Change of Control Triggers Across Sabre’s Capital Stack

 

• The announcement of Constellation Software’s accumulation of a stake in Sabre Corp. common stock has put a focus on the change of control provisions under Sabre’s debt instruments.
   
• Sabre’s credit agreement and various indentures have different beneficial ownership change of control triggers but are interrelated through cross-default provisions.

• The “public company exception” may provide a pathway for a public company acquiror such as Constellation to obtain control and avoid a change of control under Sabre’s four separate series of senior secured notes but not under its credit agreement.

Background

Sabre Corp. announced early last week that it had adopted a limited-duration shareholder rights plan in response to the accumulation of shares of Sabre’s common stock by Constellation Software Inc. Details concerning the shareholder rights plan and the circumstances giving rise to it can be found here.

Constellation had previously disclosed to Sabre its desire to mirror an investment in Sabre similar to its investment in Asseco Poland S.A., where it currently holds an indirect 24.8% position. Sabre reported on March 1 that efforts to reach a strategic governance resolution with Constellation ended after Constellation terminated the negotiations without explanation in late February. However, by week’s end the tables had turned and Sabre Corp. and Constellation Canadian Holdings, Inc. and Constellation Software, Inc. (each of the Constellation entities are Ontario corporations) had entered into a Strategic Governance Agreement and concurrently, Sabre terminated the shareholder rights plan.

Under the Strategic Governance Agreement, Sabre agreed to appoint a new director to its board (Damian McKay – a Constellation officer) and Constellation agreed to a short standstill under which it agreed not to acquire more than 15% of Sabre’s common stock for a definitive period (essentially while Constellation retains board representation rights). On March 5, 2026 Constellation reported a 12.7% stake in Sabre common stock. The details of the Strategic Governance Agreement and related transactions can be found here.

Sabre GLBL’s capital structure (illustrated below) includes term loans and four separate series of senior secured notes. In addition, as part of a pari plus financing consummated late last year, Sabre GLBL’s unrestricted subsidiary, Sabre Financial Borrower, LLC (“Sabre Financial’), issued senior secured notes, the proceeds of which were used to make a secured intercompany loan to Sabre GLBL. A corporate structure chart for Sabre Corp. is included below.

Based on the public disclosures, it does not appear that Constellation is seeking to obtain a controlling interest in Sabre, but we have no way of knowing their ultimate objectives. In any event, Sabre’s interactions with Constellation and the consummation of the Strategic Governance Agreement have put the change of control provisions across Sabre’s capital stack into focus.

As of Dec. 31, 2025, Sabre GLBL had approximately $846 million of term loans outstanding under its Amended and Restated Credit Agreement, dated as of Feb. 19, 2013, as amended through Amendment No. 11, dated as of December 9, 2025 (the “Credit Agreement”). In addition, Sabre GLBL has several senior secured note issuances outstanding, including $1.6 million of 11.250% Senior Secured Notes due 2027, $445.7 million of 10.75% Senior Secured Notes due 2029, $469.8 million of 10.750% Senior Secured Notes due 2030 and $1.325 billion of 11.125% Senior Secured Notes due 2030 (theses series of Sabre GLBL senior secured notes collectively, the “Sabre SSNs”). Sabre Financial also has $1.0 billion of 11.125% Senior Secured Notes due 2029 (the “SF SSNs”).

The change of control definitions, including the beneficial ownership threshold triggers and definition of “Permitted Holder,” are different in the Credit Agreement than in the Sabre SSNs and the SF SSNs. Below we review these provisions and discuss the possible change of control implications under the Sabre capital structure.

The Change of Control Triggers

The Sabre SSNs and SF SSNs contain a common change of control provision triggered by the acquisition by any “person” or “group” (other than one or more Permitted Holders) of “beneficial ownership” of more than 50% of the total voting power of the voting stock of the company (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act). While the exclusion of Permitted Holders is not unusual, this definition is typically limited to the existing sponsor(s), management investors and their respective affiliates. In the case of the Sabre SSNs and SF SSNs, the definition of Permitted Holder includes not only management investors but also “any direct or indirect holding company for Equity Interests of the Company, the beneficial owners of whose Voting Stock would not have caused a Change of Control if such beneficial owners had directly held the Voting Stock of the Company.” The definition of Permitted Holder therefore exempts any holding company unless the ultimate beneficial owners of the holding company would trigger a change of control. This concept is sometimes referred to as a “public company exception.” While the “company” in the applicable change of control definition refers to Sabre GLBL in the Sabre SSNs indentures and to Sabre Corp in the SF SSNs indenture, this difference is not meaningful due to the look through of ownership embedded in the Exchange Act definitions of direct or indirect beneficial ownership.

Although not listed in the U.S., Constellation’s common stock trades on the Toronto Stock Exchange and its common stock appears to be widely-held. If Constellation were to hold Sabre’s equity through direct and indirect holding companies and if there is no beneficial owner of Constellation stock that would acquire beneficial ownership of 50% of the total voting power, the change of control provision in the Sabre SSNs and SF SSNs will not be triggered. As noted above, any holding companies used to effect the acquisition would be disregarded under the Permitted Holder definition. The rationale for the “public company exception” is that there is no change of control when a company is widely-held prior to and following a merger or acquisition.

Whether an acquisition by Constellation of a controlling stake in Sabre would fit within the Permitted Holder definition’s exception will depend on whether all entities involved are deemed “direct or indirect holding company for Equity Interests of the Company.” The Schedule 13D filed by Constellation disclosed that the business of Constellation Software and Constellation Holdings are serving as the owner of and as a holding company for vertical market software businesses. Whether an entity that holds more than 50% but less than 100% fits within this definition is an interpretive question.

The Credit Agreement definition of change of control does not include a public company exception. Under the Credit Agreement, the beneficial ownership change of control is triggered when any person or group acquires beneficial ownership of a percentage of voting stock in Sabre Holdings Corp. (the direct parent of Sabre GLBL) that is more than both 40% of the then-outstanding amount and the amount then-owned by “Permitted Holders”. Under the Credit Agreement, Permitted Holders include the original sponsors Texas Pacific Group and Silver Lake Partners and management investors. Based on Sabre’s SEC filings, none of the original sponsors retain a significant ownership stake, so 40% is the applicable threshold for the beneficial ownership change of control trigger under the Credit Agreement.

None of the Credit Agreement, Sabre SSNs nor SF SSNs have any ratings-based or leverage-based portability features.

Change of Control Implications

Although the Credit Agreement and senior secured notes have different beneficial ownership change of control triggers and the change of control provision under the senior secured notes may not be triggered in circumstances where there is a trigger under the Credit Agreement, the change of control provisions are indirectly linked through cross-default provisions contained in the Sabre senior secured notes. Notably, the Sabre senior secured notes are cross-defaulted to the Credit Agreement through the material debt default provisions of the respective indentures.

For example, if a change of control is triggered under the Credit Agreement because a person (e.g., Constellation) acquires an interest in Sabre Holdings Corp.’s voting stock exceeding 40%, this would constitute an event of default under the Credit Agreement, allowing lenders to accelerate their loans. In turn, acceleration of the term loans could constitute an event of default under the cross-default provisions in the various senior secured notes allowing for the acceleration of the notes. Assuming a transaction occurred that triggered both the change of control provision in the Credit Agreement and the senior secured notes, noteholders would likely opt not to accelerate the notes, because acceleration would result in repayment at par, not the 101% change of control put premium.

The change of control provisions in the Credit Agreement and senior secured notes and the differences between the instruments leads to the question of how and when the change of control may be triggered particularly where a public company like Constellation is the potential acquiror.

Lenders and noteholders need to be cognizant of the treatment of the “public company exception” under the senior secured notes’ definition of “Permitted Holder” in the context of a stock acquisition by Constellation or a similarly situated public company. If Constellation acquires a majority or 100% stake in Sabre, then the look through will determine whether a change of control has occurred or whether the public company exception applies. As noted above, we do not think any person or group controls a majority of Constellation’s equity at present, but that would need to be verified at the time Constellation acquires a majority interest in Sabre.

In contrast, because there is no public company exception under the Credit Agreement, once Constellation acquires more than a 40% interest, the beneficial change of control will be triggered. Thus taking the entire debt stack into consideration, Constellation can acquire up to a 40% interest without running afoul of any Permitted Holder holding company ownership thresholds.

A related question is whether the difference between the 40% change of control trigger under the Credit Agreement and the 50% trigger under the senior secured notes would otherwise offer an avenue that could be exploited by a potential acquiror?

We think not. Although the lower 40% trigger could provide room for some theoretical scenarios, an acquiror that desires to acquire control, or the entire company, is going to be guided by the higher 50% threshold under the senior secured notes and design its strategy to address that threshold. And a public entity such as Constellation may look to take advantage of the public company exception. Although the 40% trigger presents a gating issue due to the cross-default provisions, it seems unlikely that a potential acquiror would get close to the 40% ownership trigger unless it has formulated a strategy to obtain over 50% control. But even in this context, Constellation or another public acquiror will need to address the absence of the public company exception in the Credit Agreement.

We can think of one hypothetical scenario where the difference between the beneficial ownership triggers between the Credit Agreement and the various senior secured notes may provide a potential acquiror some optionality. An entity seeking to acquire just less than a majority position in Sabre can negotiate a resolution with the lenders under the Credit Agreement. This could take the form of an amendment or refinancing under which such’s entity’s holdings will not constitute a change of control under the amended or successor instruments and therefore would not trigger a cross-default under the senior secured notes, which therefore could remain undisturbed.

Any public acquiror such as Constellation will also be guided by the public company change of control exception available under the senior secured notes but not the Credit Agreement. Here, the public acquiror may look to refinance or amend the Credit Agreement to remove the more restrictive terms in order to take advantage of the notes’ more permissive public company exception.

For lenders and noteholders, the bottom line is that the change of control provisions across Sabre’s debt stack offers pathways that may not lead to a beneficial ownership change of control. Staying below the 40% threshold will not trigger the change of control provisions. The more significant issue is the application of the “public company exception.” An acquiror such as Constellation may qualify under the exception and avoid a change of control under over $3 billion of senior secured notes; however, it would get no similar relief from the over $846 million of term loans.

Sabre Corp. Capital Structure as of 12/31/2025 (8.625% SSNs due 2027 repaid in March 2026)

 

Sabre Corp. Simplified Corporate Structure