• Silver Point CLO and BDCs active buyers of Learning Care’s 2028 term loan
• Funds managed by Ares, Carlyle sell or reduce positions in term loan
• Childcare providers face margin decline, government funding scrutiny before back-to-school season

Silver Point Capital is amassing a substantial position in Learning Care Group’s capital structure amid a turnover in the lender base of one of the largest childcare providers in the US.

CLO and BDC funds managed by Silver Point have been active buyers of Learning Care’s term loan in recent months, while funds managed by Ares Management, Carlyle and KKR have sold down or exited their positions, according to CLO-i data and SEC filings. Blackstone CLOs have also been expanding their holdings.

Silver Point, which runs performing credit, opportunistic and special situation strategies, now holds a major position in the capital structure of the American Securities-backed company ahead of the August 2028 maturity on the term loan and revolving credit facility, said two sources familiar with the matter.

Despite industry headwinds, the global credit investor is bullish on Learning Care’s long-term prospects, said one of the sources.

Silver Point has made contrarian investments in the past, with the investor taking a lead role in restructuring men’s clothing group Tailored Brands during its 2020 bankruptcy, betting demand for suits and formal wear would revive when the COVID-19 pandemic ended.

In recent years, Learning Care’s margins and those of its rivals’ have been squeezed as rapidly growing fixed operating costs outpace parents’ ability to pay for childcare, as reported. Increased scrutiny by the Trump administration has further burdened an industry that is heavily reliant on government funding, though officials recently walked back an effort to freeze childcare funding to select states.

S&P Global Ratings put Learning Care’s outlook on negative in June, warning that the upcoming back-to-school season is a “critical inflection point for assessing Learning Care’s performance through the next academic year.”

Weaker than expected enrollment may pressure Learning Care’s ability to refinance its USD 895m term loan and USD 115m revolver, according to the ratings agency.

A group of Learning Care’s lenders, advised by Gibson Dunn, locked arms under a cooperation agreement earlier this year, Debtwire reported in March. The co-op is open to all lenders, according to a third source familiar with the matter.

Overall, CLOs have been net sellers of the Learning Care term loan over the past twelve months with USD 133m of purchases and USD 344m of sales, according to the CLO-i data.

Learning Care offers daycare and education services for children between the ages of about six weeks and 12 years. The company operates a national platform of more than 1,100 centers across the country.

The issuer’s USD 895m SOFR+ 400bps term loan was last quoted 76.7/79, according to Markit. The loan has held steady in recent months after declining from near par last fall to the low 70s in January, before slowly recovering.

Silver Point, Blackstone and Gibson Dunn declined to comment. American Securities and Learning Care didn’t return requests for comment.