S&P rates Camelot loan BB-, notes B-

S&P said it assigned a B+ corporate credit rating to Camelot UK Holdco Ltd.

The outlook is stable.

The agency also said it assigned a BB- rating and 2 recovery rating on the company's proposed senior secured credit facility, which consists of a $175 million revolving credit facility due 2021 and $1.45 billion term loan due 2023. The 2 recovery rating indicates 70% to 90% expected default recovery.

S&P also said it assigned a B- rating and 6 recovery rating on the company's $600 million senior unsecured notes due 2024. The 6 recovery rating indicates 0 to 10% expected default recovery.

Camelot Finance SA is the borrower of the credit facility and the issuer of the notes.

Private equity firms Onex Corp. and Barings Private Equity Asia are purchasing Thomson Reuters Corp.’s Intellectual Property and Science (IP&S) business for $3.55 billion, S&P explained.

The acquisition will be partly funded with new debt detailed above, the agency said.

The B+ corporate credit rating on Camelot reflects the company's high adjusted debt leverage and financial sponsor ownership, the agency said, as well as the execution risks associated with the carve-out from its former parent, Thomson Reuters Corp., which will significantly impact its EBITDA margins and cash flow through 2018.

The rating also incorporates the risk that the company's migration of its databases and information technology (IT) infrastructure to new stand-alone systems could result in service interruptions for customers and potential loss of revenue, S&P said.

But, the agency said it believes the company's strong niche market position and highly recurring subscription-based revenue model will support improving EBITDA margins and free operating cash flow generation beginning in 2019.

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