S&P cuts Vertafore, rates loans B-, CCC

S&P said it lowered its corporate credit rating on Vertafore Inc. to B- from B and removed the rating from CreditWatch, where it was placed with negative implications on May 4 following the company's announcement that firms Bain Capital Private Equity and Vista Equity Partners would acquire the company and issue new debt.

The outlook is stable.

At the same time, the agency assigned a B- issue-level rating to the company's first-lien credit facilities. The first-lien senior secured credit facility consists of a $100 million revolving credit facility and a $1.1 billion term loan. The recovery rating is 3 and indicates an expectation for meaningful recovery (50% to 70%; higher end of the range) in the event of a payment default.

S&P also assigned a CCC issue-level rating to the company's $500 million second-lien term loan. The recovery rating is 6, indicating an expectation for negligible recovery (0% to 10%) in the event of a payment default.

Bain Capital and Vista Equity Partners will use the debt proceeds and a cash contribution to fund the acquisition of Vertafore from TPG Capital. The agency expects the existing credit facilities to be repaid as part of the transaction. The acquisition is expected to close in the third quarter of 2016.

"The rating action reflects our expectation that Vertafore's leverage will rise to 9.4x from 5.0x resulting from this transaction, and that the company will continue to operate with leverage above 8x," S&P credit analyst Sylvester Malapas said in a news release.

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