Electronic Arts Bondholders Allege $1.4 Billion Default After $55 Billion LBO

Electronic Arts bondholders alleged in reports Tuesday that the company defaulted on $1.4 billion of senior notes, escalating a fight over the 101-cent change-of-control payout triggered by the record $55 billion leveraged buyout that took EA private this year.

Why it matters: Creditors with change-of-control clauses should confirm now that defeasance language cannot reduce EA bondholders’ 101-cent payout.

What triggered EA’s $1.4 billion default allegation

The dispute traces back to EA’s take-private deal, which handed bondholders a contractual right that the buyers have spent months trying to avoid paying in full.

• Saudi Arabia’s Public Investment Fund, Silver Lake, and Affinity Partners agreed to acquire EA for $55 billion on September 29, 2025, the largest leveraged buyout on record.
• EA’s indentures require the company to repurchase its 1.85% notes due 2031 and 2.95% notes due 2051, $750 million apiece, at 101% of par once a change of control coincides with a ratings downgrade below investment grade.
• EA’s take-private deal closed and rating agencies cut or withdrew its investment-grade ratings, conditions bondholders say satisfy both triggers and entitle them to the 101-cent payout.

How did EA’s buyers try to pay less than par

Oak-Eagle AcquireCo, the acquisition vehicle for the buyout, countered with a tender offer designed to settle the notes well below the price bondholders say they are owed.

• On February 10, 2026, Oak-Eagle AcquireCo launched a tender offer pricing the 2031 notes near 92 cents and the 2051 notes near 74 cents on the dollar, tied to Treasury yields rather than the change-of-control price.
• Bondholders controlling more than 75% of the 2031 notes and more than 90% of the 2051 notes organized a cooperating group and rejected that February offer.
• EA missed its own deadline to win majority bondholder support for the buyback by February 26, 2026, and a June ratings withdrawal handed bondholders new leverage for the covenant fight that led to this week’s default allegation.

What does EA’s default allegation mean for other creditors

The standoff shows how far a well-capitalized buyer will go to avoid a contractual payout, a pattern worth watching for any company extending credit tied to covenant protections.

• EA’s buyers proposed using the indentures’ defeasance provisions, depositing Treasury securities to cover future payments, as a lower-cost substitute for the 101-cent repurchase.
• The same gap can show up in any credit agreement that leans on acceleration or change-of-control language instead of insured coverage, since a technical defeasance provision can override what a creditor expected to collect.
• Trade credit insurance pays on confirmed nonpayment or insolvency, subject to credit limits, notification requirements, and policy terms in place at the time of the loss, rather than on how a buyer’s lawyers interpret a defeasance clause after a change of control.

What to do now

Suppliers and creditors with exposure to a company going through, or recently completing, a leveraged buyout should take four steps.

1. Review existing credit agreements and bond covenants now for change-of-control and ratings-trigger language, rather than after a buyout closes.
2. Request updated financial statements and ratings commentary from any customer or counterparty currently being acquired.
3. Confirm that trade credit limits reflect post-acquisition leverage, not the pre-deal balance sheet.
4. Contact Securitas Global Risk Solutions to review whether current coverage protects receivables through a change-of-control event.

Disclaimer:
This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies. It is not meant to supersede any policy requirements. Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC has helped clients develop trade credit and political risk transfer solutions. As an independent brokerage, Securitas is focused on developing comprehensive solutions that meet client needs, ensuring a complete understanding of policy wording and delivering excellent responsive service. If you want to understand how trade credit insurance can protect your business, contact Securitas Global Risk Solutions to speak with a specialist.