Moody's trims Hyland Software

Moody's Investors Service said it downgraded Hyland Software, Inc.’s senior secured first-lien bank credit facilities rating to B2 from B1 and the second-lien term loan rating to Caa2 from Caa1. The agency also lowered the corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD. The outlook was changed to negative from stable.

“The ratings downgrade reflects Hyland's elevated leverage, increasing refinancing risk, and weakening liquidity as the company's first-lien term loan matures in July 2024. Additionally, while Hyland has not relied upon its revolving credit facility in several years, the recently extended revolver expires on April 1, 2024,” Moody’s said in a press release.

The weaker outlook reflects Hyland's upcoming debt maturities and weakened liquidity profile given free cash flow deficits that will extend through this year, the agency said.

“The company's restructuring plan entails a degree of operational risk given the potential disruption to the organization based on the size of the reduction. The outlook could be stabilized if Hyland successfully refinances its credit facilities on economically favorable terms and completes its restructuring without operational missteps,” Moody’s said.

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