S&P revises Macom view to positive

S&P said it revised Macom Technology Solutions Holdings Inc.’s outlook to positive from stable and affirmed its B issuer rating.

Macom plans to reduce debt by $100 million using cash on the balance sheet and sell $400 million of convertible notes to partially prepay its term loan.

“As a result, we expect leverage to reduce to 4.2x at close from 4.9x as of Jan. 1, 2021. Furthermore, we revised our revenue growth expectations to the low-double-digit percent area and EBITDA margins to the high-20% area. We expect this will reduce leverage to just below 4x at the end of fiscal 2021 (ending Oct. 1). We also expect free operating cash flow (FOCF) to debt of about 20%, supported by reduced cash interest expenses and net working capital and capital expenditure (capex) discipline,” S&P said in a press release.

Concurrently, S&P placed Macom’s secured credit facilities ratings on CreditWatch with positive implications.

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