Bondholders Send Default Claim After Apollo’s Brightspeed LBO

A group of Embarq Corp. bondholders sent a notice that the phone service provider is in technical default on its notes after Apollo Global Management Inc. added $4 billion of debt to the company’s parent as part of a buyout.

The bondholders said that the financing for Apollo’s purchase of local phone and broadband business Brightspeed violated the lending terms on their Embarq notes because it adds debt that is higher in priority for repayment, according to people with knowledge of the matter. Brightspeed is Embarq’s parent.

Creditors say that Embarq has 60 days to fix the technical default, or ...