CD&R's Ownership and Lack of Control

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CD&R discusses their strategy of becoming a majority equity owner of a company without controlling the board, which allows them to avoid triggering a change of control in the debt and get the deal funded more cheaply. However, this leaves CD&R in a position with no control over important decisions.

When is a change in control not a change of control? That is the question some Focus Financial lenders are asking after the company managed to finance its $7bn buyout without refinancing its existing debt.

It all hinges on the wording of the credit agreement — so for this week’s episode of Cloud 9fin, Will Caiger-Smith sat down with 9fin’s debt covenant expert James Wallick to talk about this strange situation and its possible implications.