Sungard Availability Services, a data center operator focused on retail colocation, disaster recovery solutions, and managed services, which this month filed for Chapter 11 bankruptcy protection, revealed details regarding a potential sale scenario of the company. As part of its Chapter 11 bankruptcy process, Sungard entered into a restructuring support agreement (RSA), with holders of more than 80% of each of its first-lien and second-lien term loan obligations, which contemplates that Sungard will implement a restructuring either through a:

  • Sale Scenario: sale of all, substantially all, or one or more subsets of Sungard’s assets
  • Equitization Scenario: debt-for-equity swap, which involves Sungard’s creditors converting debt owed to them, into equity in Sungard

However, the equitization scenario will only be pursued if Sungard’s sale scenario does not result in a bid or bids that exceed its to-be-determined reserve price. Note that this reserve / purchase price will be set no later than June 29, 2022.

READ MORE: Sungard Availability Services Files for Chapter 11 Bankruptcy

Recall that Sungard operates 55 facilities, comprising 24 data centers and 31 workplace recovery facilities in countries including the United States, United Kingdom, and Canada. In fiscal year 2021, the company generated revenue of $587.3m and presently has $423.8m of funded debt obligations, in the form of a revolving credit facility and three term loan facilities.

With this background, Dgtl Infra reviews Sungard Availability Services’ sale scenario, including a potential credit bid and the bidding procedures of the process for third parties.

Sale Scenario – Sungard Availability Services

Sungard Availability Services intends to run a broad and comprehensive marketing process to assess any bid or combination of bids for the company that may exceed the value of its to-be-determined reserve price. In this marketing process, Sungard will include strategic and industry participants as well as financial investors.


In 2015, Sungard retained DH Capital, an investment bank, to assist in evaluating potential strategic alternatives for the company’s various business lines and properties. Between 2015 and 2022, Sungard and DH Capital engaged with potential strategic and financial bidders on a sale and other transactions for various subsets of Sungard’s assets.

Ultimately, no definitive agreement was reached through this period. Instead, the company received preliminary indications of interest (IOIs) and proposals from various bidders for different subsets of its assets.

Credit Bid

Sungard’s creditors have agreed to cap any credit bid they may make for any/all of the company’s assets at a to-be-determined reserve price. Therefore, if one or more third parties submit a bid for Sungard’s assets that exceeds the applicable reserve price, then Sungard’s creditors will not submit a competing bid in excess of the reserve price.

As a result of this framework, Sungard will be able to pursue a marketing process in which all potential bidders will be told, with specificity, the exact value over which a substantial majority of Sungard’s prepetition secured creditors would support a sale of the company’s assets and would not overbid.

Bidding Procedures

Overall, the bidding procedures will provide prospective bidders with ~2 months to conduct diligence on Sungard’s assets and submit a bid. Specifically, the United States Bankruptcy Court for the Southern District of Texas will consider entry of these bidding procedures on May 11, 2022, with a final bid deadline of July 7, 2022.

Sungard’s proposed key dates and deadlines for its auction and sales process are as follows:

Sale Schedule
Hearing to consider entry of the bidding proceduresMay 11, 2022
Deadline for creditors to provide reserve price / Sungard to file notice with the Court of the reserve priceJune 27/29, 2022
Final bid deadlineJuly 7, 2022
Auction, to be held at the offices of Akin Gump Strauss Hauer & Feld in New YorkJuly 11, 2022
Hearing to approve proposed sale transaction(s)July 14, 2022
Bidder’s outside date for closing the transaction, per its asset purchase agreementJuly 29, 2022
Key Provisions

Sungard’s bidding procedures establish, among other provisions, the following:

  • Bidders must provide for a cash purchase price, paid at closing, in an amount greater than the applicable reserve price
  • Each bid must be accompanied by a deposit, in the form of cash, in an amount equal to 10% of the purchase price offered to acquire the applicable assets
  • Each bid must identify whether the bidder intends to operate all or a portion of Sungard’s business as a going concern or to liquidate the applicable assets. To this end, the bidder must state whether it will offer future employment to any of Sungard’s employees
Due Diligence

Prospective bidders will submit requests for additional information and receive due diligence access from DH Capital and Houlihan Lokey’s teams:

Adam LewisDH CapitalSpecial Investment Banker
Remington YeeDH CapitalSpecial Investment Banker
Andrew VranaDH CapitalSpecial Investment Banker
Tom HedusHoulihan LokeyRestructuring Investment Banker
Ethan KoppHoulihan LokeyRestructuring Investment Banker
Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing. Mary has over 5 years of experience in research and writing for Data Centers.


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