What CDK and Brookfield Agreed To
CDK Global, owned by Brookfield Business Partners, reached a liability-management arrangement with a group of creditors, said people familiar with the situation. Under the proposal, Brookfield would push its own claims down the capital stack in exchange for more time on other debt.
Specifically, the deal envisions Brookfield swapping about $675 million of its CDK holdings for lower-priority instruments that pay interest in kind. Paying interest in kind adds interest to the balance rather than using cash, helping conserve liquidity.
How Lenders Are Trading Time for Terms
In return, lenders on the steering committee would exchange secured obligations maturing in 2029 for new debt due 2.5 years later, accepting an 8% discount, the people said.
One notable term lets Brookfield secure a deeper discount from counterparties in the talks, provided it keeps purchasing debt in the secondary market up to closing. That mechanism is capped at roughly $1.2 billion of repurchases and allows for up to a 13% discount. Bloomberg data show that on Friday, the company's term loan of nearly $4 billion maturing in 2029 traded at 52 cents on the dollar. An earlier Bloomberg report noted price dispersion after a failed challenge to a creditor pact.
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The Stakes Around CDK's Balance Sheet
CDK is grappling with weaker earnings and high leverage while working through the aftermath of a significant 2024 cyberattack. Moody's Ratings downgraded the company by two notches to Caa2 in early August, citing high leverage, muted revenue, and refinancing risk; Caa2 sits eight rungs into speculative-grade territory.
Who Is Advising Whom, and What Comes Next
CDK is advised by PJT Partners, and the creditor group has hired Houlihan Lokey and Gibson Dunn & Crutcher. The lenders are bound by a cooperation agreement that prevents holders from peeling off to negotiate a separate deal.
Spokespeople for Brookfield and Houlihan declined to comment. Efforts to reach CDK, Gibson Dunn & Crutcher, and PJT Partners for comment were unsuccessful. The company will now seek to negotiate with remaining lenders, but any offer to them cannot be more favorable than what steering-committee members receive. Last week, CDK appointed Sudhakar Ramakrishna to serve as its new chief executive officer.
