Thoma Bravo weighs concessions as Sophos turns to lenders for $2bn refinancing

Thoma Bravo, which bought Sophos in 2020, has indicated it will not inject fresh capital into the company, rebuffing a request from some investors concerned about the threat artificial intelligence poses to software businesses.

The stance leaves the refinancing to stand or fall on the company’s own credit rather than sponsor support, and the terms remain under discussion and could change.

Sophos has spent months in talks with lenders over extending a $2.1bn loan due in March 2027, and a number of private credit firms passed on the deal despite the offer of a steep increase in yield. The company is now looking to tackle both the term loan and a revolving credit facility, betting that a recent earnings update will improve its chances.

Sophos disclosed 6% growth in annual recurring revenue in the three months to 30 June against a year earlier, and its adjusted earnings before interest, taxes, depreciation, and amortisation rose 10% to about $120m. Its term loan has recovered to around 96.88 cents on the dollar, up from 92.69 in February at the height of the software selloff, according to data compiled by Bloomberg, signalling improved lender sentiment.

Last month, Thoma Bravo had to make major concessions to sweeten a $5bn refinancing for another holding, Proofpoint, and its software exposure has drawn scrutiny after it suffered one of its biggest losses when creditors took control of customer-survey firm Medallia.

Thid situation highlights the pressures building across sponsor-owned software companies as large maturities approach and lenders reassess the sector’s exposure to AI. For Thoma Bravo, holding the line on fresh equity signals confidence in Sophos’s underlying performance, but it also leaves the company to negotiate from its own balance sheet.