(Bloomberg) -- Cybersecurity software firm Magenta Buyer is in talks with creditor Elliott Investment Management to provide it with fresh money as revenue falls and liquidity thins, according to people familiar with the situation. 

The company, previously McAfee Corp.’s enterprise business, faces two creditor factions — one involving Elliott and the other a group of first-lien lenders, Bloomberg News reported in March. 

The lenders have been working with Centerview Partners and Akin Gump Strauss Hauer & Feld, and those creditors’ advisers plan to sign non-disclosure agreements as negotiations advance between the lenders and Magenta advisers, the people said last week. They asked not to be identified discussing a private matter. 

A cash injection is pivotal for Magenta, which according to Moody’s Ratings has a “weak liquidity profile.” It downgraded the software firm by two notches to Caa2 on Monday, citing “uncertainty over when the company will be able to generate positive free cash flow as well as challenges reversing revenue declines” since 2021’s buyout by a consortium led by Symphony Technology Group.

Magenta operates under two segments called Trellix and Skyhigh Security. Messages left with both on Monday — as well as with Elliott, Akin and Symphony — weren’t immediately returned. Centerview declined to comment.

Elliott in late 2022 purchased more than half of a $415 million leveraged loan that paid a dividend to Symphony. A Magenta first-lien term loan that matures in 2028 is quoted at 60 cents on the dollar, according to data compiled by Bloomberg, while a second-lien term loan is around 33 cents. 

 

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