Electronic Arts Bondholders Allege $1.4 Billion Debt Default

Electronic Arts bondholders have alleged a $1.4 billion debt default following the company's transition to a private entity. The dispute centers on whether the videogame maker must repay bondholders at a premium of 101 cents on the dollar, a standard redemption practice triggered by a change in corporate control.

The take-private transaction was executed by a consortium consisting of Saudi Arabia's Public Investment Fund, the private-equity firm Silver Lake, and Affinity Partners. This leveraged buyout is described as the largest of its kind in history.

An investor group formally notified the company of the alleged default last week after the completion of the transaction. The group contends that the company failed to meet its obligations to bondholders during the shift to private ownership.