Moody's boosts Epiq, rates loan B2

Moody's Investors Service said it upgraded DTI Holdco, Inc.'s (Epiq Global) corporate family rating to B3 from Caa1 and probability of default rating to B3-PD from Caa1-PD. Concurrently, the agency assigned a B2 rating to Epiq's planned first-lien senior secured credit facility, consisting of a $125 million revolver due 2027 and a $960 million first-lien term loan due 2029.

Epiq will use the proceeds and a $250 million privately placed, unrated senior secured second-lien term loan to retire the company's credit facility and pay associated transaction fees and expenses. Moody's expects the new revolving credit facility to be undrawn at closing. The financing is expected to close by the end of April.

“The upgrade of the CFR to B3 incorporates the expectation of Epiq's timely completion of the refinancing transaction on currently proposed terms will ease Moody's concerns around the company's ability to refinance on commercially viable terms in advance of debt maturities. As proposed, the new capital structure affords the company ample liquidity, and hence time to execute its future growth plan and manage working capital volatility. However, the refinancing will not alter the company's very high level of debt and leverage, with pro forma debt to EBITDA of 7.8 times (Moody's adjusted and expensing capitalized software development expenses) as of Dec.31, 2021,” the agency said in a press release.

The outlook remains stable.

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