S&P cuts Magenta Buyer

S&P said it cut its ratings for Magenta Buyer LLC and its first-lien credit facility to B- from B. The agency also downgraded Magenta Buyer’s second-lien term loan to CCC from CCC+. The 3 first-lien recovery rating and the second-lien 6 recovery rating are unchanged.

Magenta Buyer plans to issue a $415 million incremental first-lien term loan. It will distribute $365 million to shareholders and add the remaining $50 million to the balance sheet.

S&P noted the new loan will floating rate and that annual interest expense could reach $540 million.

“We expect the company's free operating cash flow (FOCF) to turn negative in 2022. We project FOCF/debt of about negative 3% in fiscal 2022 and anticipate FOCF to reach breakeven during fiscal 2023,” the agency said in a press release.

The outlook is stable.

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