S&P rates Ultimate Software loans B

S&P said it assigned a B- issuer credit rating to Ultimate Software Group Inc. and assigned a B issue-level rating and 2 recovery rating to the proposed $2.3 billion first-lien term loan and $275 million revolving credit facility. The privately placed $900 million will be unrated.

The outlook is stable.

“The rating reflects our view of the Ultimate Software Group Inc.'s expected S&P Global Ratings leverage in the high-11x area over the next 12 months and negative free operating cash flow (FOCF) of around $60 million in fiscal 2019,” S&P said in a news release.

“Offsetting these financial risks is our view of its strong position in the human capital management (HCM) market, high retention rates with low customer concentration, an established public track record of strong revenue, FOCF growth, and stable operating margins and bookings that provide a high level of visibility into fiscal 2019 operating performance.”

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