Moody’s rates Exact facilities B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Exact Holdings North America Inc. (initially Exact Merger Sub LLC) following the announcement of a leveraged buyout.

At the same time, the agency assigned a B2 rating to the company's proposed $430 million senior secured first-lien credit facility ($50 million revolver and $380 million term loan) and a Caa2 rating to the proposed $140 million senior secured second-lien term loan.

The ratings outlook is stable.

Proceeds from the proposed debt financing along with new and rollover equity will be used to fund a buyout of ECi Software Solutions by funds advised by financial sponsor Apax Partners LLP from Carlyle Group.

Exact Merger Sub is an acquisition vehicle that will be merged with and into Exact Holding North America upon closings of the transaction, with Exact Holding North America being the surviving entity and obligor under the new capital structure. Exact Holding North America will be a direct wholly owned subsidiary of Eclipse Acquisition LLC, a guarantor under the proposed credit facilities.

"While the transaction involves relatively high level of debt and leverage for the rating category, the stable business model with highly recurring subscription-based revenues and strong foothold in the niche SMB market for ERP software should support good discretionary cash flow that would allow ECi to deleverage over time," Moody's lead analyst Oleg Markin said in a news release.

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