S&P gives Veracode, loan B-

S&P said it assigned B- ratings to Veracode Parent LP and its planned $330 million senior secured credit facility, consisting of a $300 million senior secured term loan and a $30 million revolver. The revolver will be undrawn at close. The recovery rating on the term loan is 3.

“We are assigning our B- issuer credit rating to Veracode, reflecting the firm's high initial S&P Global Ratings-adjusted leverage of about 14x as of June 30, 2020 (leverage would be mid-5x excluding class A equity), and our expectation that leverage will remain above 10x through the next 12-24 months,” S&P said in a press release.

The agency said it forecasts Veracode will generate free cash flow of about $30 million annually, supported by a low cash interest burden, given much of the adjusted debt is constituted by class A equity without a cash dividend.

Proceeds will be used to repay debt.

The outlook is stable.

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