Israeli cybersecurity firm NSO Group Ltd. is at risk of defaulting on its debt and is considering a sale, Bloomberg reported on Monday afternoon. 

A sale is believed to be one of several options under consideration. Another option that has been floated, according to the report, could involve NSO Group pursuing debt refinancing.

NSO Group provides Pegasus to military, law enforcement and intelligence agencies. The spyware can remotely infect iPhones without requiring the user to take any action, such as opening a malicious file. 

Last month, the U.S. Department of Commerce sanctioned NSO Group after determining that the company’s spyware was used by foreign governments to target government officials, journalists, businesspeople, activists, academics and embassy workers maliciously. NSO Group was added to an Entity List maintained by the Commerce Department’s Bureau of Industry and Security. 

U.S.-based organizations are now prohibited from purchasing, exporting or transferring any cybersecurity tools developed by NSO Group unless they receive a license. Organizations seeking such a license should expect a “presumption of denial,” the Commerce Department stated last month. 

According to Bloomberg, NSO Group is in danger of defaulting on its debt. The company reportedly owes approximately $450 million to lenders. Last month, ratings agency Moody’s Corp. warned that there’s an increased risk of NSO Group breaching the terms of its loans.

One loan, which was issued to NSO Group in 2019 with a face value of $300 million, is believed to have traded at 70 cents on the dollar in November. As of Monday, the trading price is said to have declined to about 50 cents on the dollar. 

NSO Group’s revenue is expected to decline approximately 8% this year compared with 2018. According to Bloomberg’s sources, the company estimates that sales will reach about $230 million in 2021. 

NSO Group has hired financial services provider Moelis & Co. to help evaluate its options. The company is said to have held discussions with multiple investment funds about pursuing debt refinancing or a sale. 

One of the plans being considered would reportedly involve two potential buyers, described as U.S.-based investment funds, acquire NSO Group and shut down its Pegasus unit. The Pegasus unit is said to account for about half of NSO Group’s revenues.

The proposed plan specifies that, after shutting down the Pegasus unit, the two funds would provide NSO Group with about $200 million in capital. NSO Group could reportedly use the capital to refocus and “turn the know-how behind Pegasus into strictly defensive cyber security services.” Additionally, NSO Group might expand its activities in the drone technology market under the plan.

The report comes a few weeks after NSO Group was sued by Apple Inc. over the use of its spyware to hack iPhones. Apple stated at the time that the lawsuit is aimed at holding the company accountable for the targeting of iPhone users. The smartphone giant also stated that it will notify users if they’re targeted by spyware. 

Image: NSO Group