S&P rates Mermaid, facility B-

S&P said it assigned B- ratings to Mermaid BidCo Inc. and its planned senior secured credit facility. The facility’s recovery rating is 3, indicating an expectation for meaningful (50%-70%, rounded estimate: 60%) recovery. CapVest will use the proceeds and equity to buy Mermaid, which does business as Datasite Global Corp.

“The B- rating reflects the material increase in leverage of over 9x for the next 12 months and supports our view of the new sponsor’s aggressive financial policy. Pro forma for the leveraged buyout, we expect S&P Global Ratings-adjusted leverage to increase to the high-9x area in fiscal 2021 compared with leverage in the low-4x area for the past 12 months ended Oct. 31, 2020,” S&P said in a press release.

The company’s pro forma capital structure includes a $100 million revolving credit facility (expected $10 million drawn at close), a combined $560 million equivalent cross-border first-lien term loan with $300 million denominated in U.S. dollars and €220 million and an unrated $411 million holdco shareholder loan.

The outlook is stable. The outlook reflects an expectation that continued market share gains in video data room solutions in conjunction with an economic recovery will drive revenue growth in the mid-teens percentage area in fiscal 2022, S&P said.

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