Moody's rates Vertafore loans Caa1

Moody's Investors Service said it assigned a Caa1 rating (LGD5, 87%) to Vertafore, Inc.'s proposed $260 million senior secured second-lien term loan.

Vertafore has B2 corporate family and probability-of-default ratings and B1 ratings (LGD3, 34% from 35%) on its $75 million senior secured revolving credit facility due 2015 and $550 million senior secured term loan due 2016.

The outlook is stable.

Proceeds will be used to refinance the $240 million senior unsecured term loan provided by TPG Capital.

The Caa1 rating reflects the loan's junior ranking within the capital structure and second-lien security on the company's assets.

The B2 corporate family rating reflects Vertafore's high initial pro-forma leverage of about 7x, adjusted debt to EBITDA following the close of the transaction, and the company's relatively small scale and concentrated business profile, Moody's said.

The B2 rating is supported by the company's leading market position, its recurring revenue base driven by a subscription hosting model and high levels of maintenance renewals, and solid operating performance through economic cycles in a business requiring minimal capital investment, the agency noted.

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