Bain, others delay SunGard IPO

Bain Capital Partners L.L.C. and the other private-equity firms that bought SunGard Data Systems Inc. for $11.3 billion in 2005 are delaying plans to sell shares to the public while the company's debt limits its attractiveness.

The Wayne computer software and services provider whose systems process most Nasdaq trades disclosed in a Monday regulatory filing that it no longer planned an initial public offering as a condition of receiving creditor permission to spin off its capital-intensive disaster-recovery unit to its owners, who in addition to Bain are Silver Lake Management L.L.C. and KKR & Co. A March agreement with lenders had mandated an IPO within 20 days of a split.

Separating the unit, which provides about 33 percent of sales, will enable the rest of the business to begin paying down debt, according to a report Tuesday by Moody's Investors Service. Saddled with $7 billion of obligations by the takeover, SunGard, whose other units serve the financial industry, schools, and government agencies, has been unprofitable every year since its acquisition as interest expense overwhelmed operating profit.

"What would be attractive in an IPO scenario would be the core financial-systems business," Stephen Sohn, a credit analyst at Moody's, said in a telephone interview. "Significantly lower leverage would improve the prospects of exiting the investment."

The disaster-recovery unit may incur as much as $1.5 billion of debt as part of the split, according to the Jan. 27 filing. The spin-off was announced last week.

"An IPO is not part of the current transaction, but that does not necessarily preclude a future IPO or other strategic alternatives," George Thomas, a spokesman for SunGard, wrote in an e-mail.

The company divested its higher-education unit to software company Datatel Inc., owned by Hellman & Friedman L.L.C., for $1.8 billion in 2011.

SunGard reported a loss of $66 million last year, after a $149 deficit in 2011.