Newfold Digital Asks Lenders to Sign NDA to Review LME Terms

Newfold Digital has been asking lenders to sign nondisclosure agreements to review the terms of a liability management exercise, according to sources.

The NDA calls for signees to agree to a six-month standoff period in which the signees cannot pursue litigation, among other things, in relation to the proposed transaction, the sources said. Lenders holding a substantial portion of the company’s debt have gone restricted, they added.

The NDA in Newfold has been somewhat standardized since the one in Better Health drew investor ire and the issue came up again in Summit Behavioral Healthcare. The six-month standoff period in Newfold Digital’s NDA is notably longer than the 45-day period in Better Health’s NDA. Kirkland & Ellis advised the company side on all three deals.

The rolling, go-restricted process does not seem to indicate whether the underlying LME process is either non-pro-rata or pro rata, as the Better Health transaction ended up being a non-pro-rata, tiered deal, and the Summit Behavioral Healthcare deal was pro rata. However, the much-predicted pro-rata-deals-only trend after the Serta decision on New Year’s Eve has not materialized, especially with tiered-systems being baked into cooperation agreements.

The Clearlake Capital Group-backed web technology company was downgraded by Moody’s Ratings last month, which stated that the move reflected their “view that the likelihood of a debt restructuring has increased given the February 2026 upcoming maturity of the senior secured revolver and negative operating trends that include declining revenue and insufficient liquidity to repay the revolver.”

“The downgrade of the PDR to Caa3-PD from Caa1-PD incorporates our view of a high likelihood of a distressed exchange,” Moody’s added. “Governance factors are a consideration in the ratings action. The company’s financial policies are characterized by a tolerance for high leverage, refinancing risk and prioritization of shareholder returns, which has increased credit risk.”

Octus previously reported that Newfold is being advised by Kirkland & Ellis and PJT Partners, and a majority creditor group is working with Akin Gump and Evercore. A separate group of minority creditors has hired Glenn Agre and Guggenheim Partners, as reported.

CLOs with the largest exposure are as follows:
 

An estimate of the company’s capital structure is shown below:
 

The average price of Newfold Digital’s $2.57 billion SOFR+350 bps first lien term loan B due 2028 is 52.79 as of today, slightly down from 54.66 three months ago, according to Solve.

Newfold Digital, sponsor Clearlake Capital Group, and advisors to the company and creditors did not respond to requests for comment.