Electronic Arts disputes bondholder claims following $55B buyout

Electronic Arts (EA) is engaged in a legal and financial dispute with bondholders regarding a potential default payout following its $55 billion leveraged buyout. The conflict centers on approximately $250 million in disputed premiums related to two sets of notes due in 2031 and 2051.

Creditors argue that a change-of-control event triggered a requirement for a 101-cent payout because major agencies like Fitch, Moody’s, and S&P downgraded the company's debt. EA, however, contends that it has satisfied its obligations through a process known as defeasance, using US Treasuries to collateralize future payments.

To support its position, EA is utilizing an investment-grade rating from Egan-Jones Ratings Co to argue that the bonds maintain investment quality. Bondholders dispute this, asserting that a private rating cannot substitute for the public ratings of major agencies. The dispute follows the record-breaking buyout involving Saudi Arabia’s Public Investment Fund, Silver Lake, and Affinity Partners.