Moody's alters UKG outlook to negative

Moody's Investors Service said it affirmed UKG Inc.'s ratings, including its B2 corporate family rating and the B1 and Caa1 ratings for its first- and second-lien credit facilities, respectively, and changed the outlook to negative from stable.

“The rating action was prompted by the cybersecurity incident that affected certain parts of UKG's business, the impact of which could further pressure the company's already weak credit metrics,” Moody’s said in a press release.

UKG reported it learned of the ransomware incident on Dec. 11, that affected Kronos Private Cloud—the environment where some of its UKG workforce central, UKG telestaff, healthcare extensions and banking scheduling solutions are deployed. UKG projects only a limited number of customers that use the affected solutions, which are hosted on third-party data centers, are affected, the agency said.

“The negative outlook is primarily driven by governance and social risk considerations. Earlier in December 2021, UKG raised $1.5 billion of new debt to fund an approximately $1 billion of potential distribution to its shareholders and it retained $500 million of cash for future acquisitions. The increase in debt left the company weakly positioned in the B2 rating category, with limited cushion to absorb the impact from potential execution challenges,” Moody’s said.

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