Clearlake Capital Group has expanded the disqualified lender list for Pretium Packaging to almost 100 names, pushing the boundaries of what has become a standard tool for sponsors navigating distressed situations.

Clearlake acquired the Missouri-based plastic packaging manufacturer in 2020, but by 2023 the company was faced with slowing consumer demand and struggled to service its debt load from the initial acquisition and subsequent add-ons. After a distressed exchange in October 2023, Pretium's $1.2 billion loan due 2028 now trades at around 56 cents on the dollar. S&P Global Ratings predicts the company will run free operating cash flow deficits through 2025.

The disqualified lender list expansion came after an investor seeking to take over the troubled manufacturer nearly acquired a significant chunk of its debt through a block trade. Clearlake responded by dramatically expanding the lender blacklist to prevent the trade and similar attempts in the future.

Historically, disqualified lender lists (“DQ List”) were designed to prevent competitors of the borrower, or other entities with competing business interests (like owners of competitors), from acquiring debt and then using that position to access confidential information or to otherwise intentionally harm the borrower.

Over the last ten years, borrowers in the syndicated loan markets have expanded the scope of DQ lists to include investors affiliated with competitors, firms perceived as too aggressive during restructurings, or simply those deemed difficult to work with. Borrowers and sponsors now regularly negotiate for the right to amend the list of lenders after the closing date—like Clearlake's list expansion—to ensure ongoing control over investors in the borrower's debt.

Even with this trend toward elongation, DQ lists typically include a handful of firms to a few dozen at most. By comparison, Clearlake's approach looks extreme.

The potential pitfall with a lengthy list is the possibility of artificially capped demand in the secondary market when large groups of potential purchasers are prohibited from buying the debt.

DQ lists are also typically preserved through a default event, which can be problematic for lenders trying to exit positions. It's not always clear that lenders who purchase the debt when issued are adequately pricing in the risk of reduced liquidity and the corresponding effect on their ability to unload the debt down the road if it becomes distressed. This can be particularly true in the less liquid middle market.

With growing DQ lists, "loan liquidity becomes limited as certain lenders are constrained from getting involved in certain situations and, as a result, existing lenders may struggle to exit stressed positions," writes Proskauer.

This can leave holders stranded and limit options in a restructuring.

The risk to the borrower is that they could end up in a situation where they’re stuck with existing creditors who can't sell down their holdings, but who also don't want to own the company or put in any new money.

For Clearlake, the list expansion prevented one unwanted investor from gaining a foothold. Whether avoiding that immediate threat justifies the potential consequences remains an open question. If Pretium continues to struggle, financing options may be hard to come by when optionality is needed most.

Citing a source familiar with the firm's thinking, Bloomberg reported that Clearlake views the Pretium list expansion as a one-time occurrence and does not intend to use such expansive blacklists as a broader firm-wide strategy.

• Apollo and Lone Star Funds are among the bidders for Castrol, the lubricants business being sold by BP (LSE: BP) for between $8 billion and $10 billion, per Bloomberg.

• EOG Resources (NYSE: EOG) agreed to acquire Encino Acquisition Partners, a Utica Shale-focused energy company, for $5.6 billion including debt, with CPP Investments among the sellers.

• Wells Fargo (NYSE: WFC) agreed to sell its rail equipment leasing unit to a new joint venture between GATX (NYSE: GATX) and Brookfield Infrastructure (NYSE: BIP) for $4.4 billion.

• Warburg Pincus and KPS Capital Partners are considering a joint bid for Gerresheimer AG, a German medical packaging manufacturer, after KKR withdrew last month from an earlier joint bid with Warburg Pincus, which valued the company at around €3.1 billion.

• Thoma Bravo hired Lazard to find a buyer for Apryse, a Denver-based document processing software provider that could fetch over $3 billion, per Reuters.

• Advent International is in talks to acquire Kereis, a French insurance broker, from Bridgepoint for more than €2 billion, per Bloomberg.

• Brookfield Asset Management and CDPQ agreed to acquire Antylia Scientific, an Illinois-based laboratory supplier, from GTCR for $1.34 billion.

• E.l.f. Beauty (NYSE: ELF) agreed to acquire Rhode, a makeup brand founded by Hailey Bieber, for $1 billion.

• CVC Capital Partners and Tabreed are in talks to acquire Multiply Group's district cooling business for more than $1 billion, per Reuters.

• Shell (NYSE: SHEL) agreed to acquire a 12.5 percent stake in a Nigerian oilfield from TotalEnergies (Paris: TTEF) for $510 million.

• Vista Equity Partners agreed to acquire Acumatica, a Bellevue-based ERP software provider, from EQT.

• EssilorLuxottica (Paris: EL) agreed to acquire Optegra, an ophthalmology platform, from MidEuropa.

• Travel Nurse Across America, a staffing portfolio company of Gridiron Capital, agreed to merge with TotalMed, a portfolio company of Stella Point Capital.

• LLR Partners invested in TruTechnologies, a Durham-based provider of real-time clinical trial oversight solutions.

• Amplix, a tech advisory firm owned by Gemspring Capital, acquired The Hastings Group, a Hampton, New Jersey-based consulting firm.

• IG4 Capital is in advanced talks to lead a restructuring of Rio Alto Energias Renováveis, a listed Brazilian solar company, per Reuters.

• Valeas Capital Partners agreed to acquire a majority stake in TicketManager, a provider of enterprise event ticket and guest management solutions.

• Dojo, a UK payments technology company, raised $190 million from Vitruvian Partners.

• HarbourView Equity Partners agreed to purchase select catalog assets from music producer Rodney "Darkchild" Jerkins.

Tech, Vertical SaaS, & Misc. Enterprise

• Grammarly, an AI writing assistant, raised $1 billion in non-dilutive financing from General Catalyst's Customer Value Fund.

• ClickHouse, a real-time data analytics platform, raised $350 million in Series C funding led by Khosla Ventures, with participation from BOND, IVP, Battery Ventures, Bessemer Venture Partners, Index Ventures, Lightspeed, GIC, Benchmark, Coatue, FirstMark, and Nebius.

• Snorkel AI, a Redwood City-based AI data platform, raised $100 million in Series D funding at a $1.3 billion valuation led by Addition, with participation from Prosperity 7 Ventures, Greylock, Lightspeed, BNY, and QBE Ventures.

• Empathy, a platform for end-of-life logistics and grief support, raised $72 million in Series C funding led by Adams Street Partners, with participation from General Catalyst, Index Ventures, Entrée Capital, Brewer Lane Ventures, SemperVirens, Latitude, LionTree, Aflac Ventures, Allianz Life Ventures, Citi Impact Fund, Munich Re, MetLife, New York Life, Securian, and TIAA Ventures.

• Chalk, a data platform for AI inference, raised $50 million in Series A funding at a $500 million valuation led by Felicis, with participation from Triatomic Capital, General Catalyst, Unusual Ventures, and Xfund.

• Buildots, a construction management platform, raised $45 million in Series D funding led by Qumra Capital, with participation from OG Venture Partners, TLV Partners, Poalim Equity, Future Energy Ventures, and Viola Growth.

• Rillet, an ERP platform for accounting automation, raised $25 million in Series A funding led by Sequoia Capital, with participation from First Round Capital, Creandum, and Susa Ventures.

• Stotles, a platform connecting private suppliers with public sector opportunities, raised $13 million in Series A funding co-led by Headline and Acton Capital, with participation from Form Ventures and Seedcamp.

• Inven, a Finnish deal sourcing platform for private markets, raised $12.75 million in Series A funding co-led by Ventech and Vendep Capital, with participation from Lifeline Ventures and Joint Effects.

• Context, an AI-native office suite, raised $11 million in seed funding at a $70 million valuation led by Lux Capital, with participation from Qualcomm Ventures and General Catalyst.

• FarmQA, a digital agronomy platform for crop consultants, raised $4 million in seed funding led by gener8tor 1889, with participation from O'Leary Ventures via Wonder Fund North Dakota and Badlands Capital.

• RevisionDojo, an AI education platform for personalized learning, raised $3.4 million in seed funding from 468 Capital, Acacia Venture Capital Partners, AMINO Capital, CoreNest, FV, Exitfund, Goodwater Capital, iSeed Ventures, Lombardstreet Ventures, Orange Collective, Team Ignite Ventures, Transpose Platform, and Y Combinator.

Fintech

• Conduit, a cross-border payments platform using stablecoins, raised $36 million in Series A funding co-led by Dragonfly and Altos Ventures, with participation from Sound Ventures, Commerce Ventures, DCG, Circle Ventures, Helios Digital Ventures, and Portage Ventures.

Consumer & Media

• David, a protein bar brand co-founded by RXBAR founder Peter Rahal, raised $75 million in Series A funding led by Greenoaks, with participation from Valor Equity Partners, at a post-money valuation of $725 million.

• Wander, a short-term rental platform operating over 1,000 properties, raised $50 million in Series B funding co-led by QED Investors and Fifth Wall, with participation from Redpoint Ventures, Uncork, Starwood, and Breyer Capital.

• Snabbit, an Indian platform providing 10-minute home cleaning and laundry services, raised $19 million in Series B funding led by Lightspeed, with participation from Elevation Capital and Nexus Venture Partners.

• Creatify, an AI platform for video advertising, raised $15.5 million in Series A funding co-led by WndrCo and Kindred Ventures, with participation from NFDG, Millennium New Horizons, Creator Ventures, Leadout Capital, and Comcast Ventures.

• Rumi, an AI media company building decentralized content platforms, raised $4.7 million in pre-seed funding co-led by a16z crypto CSX and EV3.

Healthcare

• Vima Therapeutics, a Cambridge-based biotech developing oral therapies for movement disorders, raised $60 million in Series A funding led by Atlas Venture, with participation from Access Industries and Canaan.

• Acclaro Medical, a fiber laser technology company for aesthetic skin treatments, raised $23 million in Series B funding led by Accelmed Partners, with participation from existing investor 3E Bioventures Capital.

• AssistIQ, an AI company using computer vision to optimize hospital surgical supply chains, raised $11.5 million in Series A funding led by Battery Ventures, with participation from Tamarind Hill.

Industrials, Greentech, & Other

• Radiant, a portable nuclear microreactor developer, raised $165 million in Series C funding led by DCVC, with participation from StepStone, Giant Ventures, Hanwha Asset Management Venture Fund, SGA, Crossbeam Venture Partners, Align Ventures, ARK Venture Fund, Gigascale Capital, HartBeat Ventures, Pax Ventures, Andreessen Horowitz, Union Square Ventures, Felicis, Washington Harbour Partners, and Chevron Technology Ventures.

• Heron Power, a developer of solid-state transformers for electrical grid modernization, raised $38 million in Series A funding led by Capricorn Investment Group, with participation from Breakthrough Energy Ventures, Energy Impact Partners, Gigascale Capital, Powerhouse Ventures, and Valor Equity Partners.

• Volteras, a platform connecting electric vehicle infrastructure with energy systems, raised $11.1 million in Series A funding led by Union Square Ventures, with participation from Wex, Edenred, Exor Ventures, and Long Journey Ventures.

• L Catterton raised approximately $11 billion in new fund commitments, including $6.75 billion for its tenth flagship buyout vehicle.

• Terminus Capital Partners, an Atlanta-based private equity firm focused on business software, raised $250 million for its debut fund.

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