Dynata is exploring a bankruptcy filing after efforts to sell the company fell through and it failed to make interest payments on its loans in February, according to two sources familiar with the matter.

An ad hoc group of lenders working with Gibson Dunn is expected to provide the DIP financing for the firm, according to the first source.

The market research firm has been operating under a forbearance agreement with the ad hoc group, after deferring an interest payment on its USD 250m second lien term loan and a portion of the interest on its USD 900m first lien term loan that were due in February.

“It’ll be a good outcome for lenders when the company files,” the second source said.

Sponsors Charles Court Square Capital Partners and HGGC were looking to sell Dynata, in a last-ditch effort to address the company’s looming maturities, Debtwire previously reported.

The private equity sponsors have been active in efforts to sell the market research firm over the years. In 2019, a sale for a valuation above USD 3bn was in the works for Dynata. In 2022, the company was working with Evercore for a sale again, but the sale process was faltering in the late stages amid scrutiny over the business’s earnings adjustments, Debtwire’s sister publication Mergermarket reported in May 2022. Apollo was identified as one of the bidders at the time.

Dynata has been under pressure from weak earnings and negative cash flow, which along with limited revolver availability led Moody’s Investors Service to downgrade the issuer’s corporate ratings to Caa3 in September 2023.

The company requested Moody’s to withdraw its ratings after the issuer said the ratings agency misclassified its partial interest payment as a limited default. Rating agency S&P also withdrew the issuer’s CCC- credit ratings and the first lien and second lien loan ratings per the company’s request on April 3.

The issuer’s USD 900m S+ 550bps first lien loan due December 2024 dipped from the mid-70s in January to the mid to high-50s in February, according to Markit. The loan was last quoted 62.05/63.93. The second lien S+ 950bps loan with USD 250m initial amount maturing in 2025 was last quoted 8/14.37.

Court Square declined to comment. Dynata and HGGC did not respond to requests for comment.