Apollo Debt Deal for Brightspeed LBO Has Creditors Crying Foul

A proposed $3.9 billion debt sale to help fund Apollo Global Management Inc.’s buyout of a Lumen Technologies Inc. business segment is attracting the ire of a group of creditors who claim the financing terms would put one of its subsidiaries in default.

Investors holding more than 10% of Embarq Corp. notes due 2036 sent a letter to Apollo and Lumen earlier this week alleging that guarantees offered on the new debt, being marketed under the Brightspeed name, would violate their indenture by overriding their priority for repayment.

Such a violation would prohibit Apollo and Lumen from closing the ...