S&P cuts GlobalLogic, rates loan B

S&P said it downgraded GlobalLogic Holdings Inc.’s rating to B from B+ and assigned a B rating with a 3 recovery rating to its proposed $525 million incremental term loan. GlobalLogic also plans to upsize its revolver to $150 million from $75 million. S&P assigned a B rating to the revolver as well.

Term loan proceeds will be used to fund a $475 million dividend, and the remainder would sit on the balance sheet.

“The transaction would almost double the company’s outstanding gross debt. We believe given this debt-funded transaction coupled with our anticipation of lower profitability over the next 12 months, GlobalLogic’s leverage will increase to the low-6x area in fiscal 2021, above our 5x downgrade threshold,” S&P said in a press release.

The outlook is stable.

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