ConvergeOne’s forbearance agreement with an ad hoc group of first lien lenders is set to expire Tuesday, putting more pressure on the cash-strapped company, said two sources familiar with the situation.

The cloud infrastructure and IT services company and the lender group have reached an agreement that is expected to be implemented in bankruptcy court, said the first and a third source familiar.

ConvergeOne recently failed to make interest payments for some of its debt and struck a forbearance agreement with lenders last Friday, 29 March, the first two sources said.

ConvergeOne’s loan prices have been plunging since early March.

The issuer’s USD 960m L+500bps first lien term loan due January 2026 was quoted 19.37/23.5 and the USD 275m L+ 850bps second lien term loan due 2027 was quoted 3/5.37 today, according to Markit.

The first lien note was quoted 41.8/45.8 on 7 March before moving down sharply, and the second lien was quoted 20/28 on March 11 before the loan price started to meaningfully decline.

An ad hoc group of ConvergeOne’s first lien lenders have been working with PJT Partners as financial advisor and Gibson Dunn as legal counsel, Debtwire previously reported.

The company is represented by White & Case and Evercore. White & Case previously was counsel to CVC Capital Partners in 2019 when it acquired ConvergeOne.

The issuer ended the third quarter with USD 25.69m in cash, Debtwire reported in December. In May 2023, CVC contributed USD 29.6m to the company in the form of promissory notes coming due in April 2026.

The company appointed new executives at the beginning of 2023, and the new management team started implementing significant cost reductions, according to an S&P report from September 2023 when the rating agency downgraded ConvergeOne to CCC+.

ConvergeOne recently added two new executives to its c-suite in March. Tamara Shaw was named the company’s first Chief Transformation Officer and Meghan Keough its first Chief Marketing Officer.

S&P noted that ongoing earnings headwinds, concerning EBITDA and cash flow, and a larger-than-expected increase in base interest rates made ConvergeOne’s debt capitalization unsustainable.

ConvergeOne and CVC did not respond to requests for comment.