Moody’s gives McGraw-Hill loans Ba3, notes B3

Moody's Investors Service said it affirmed the B2 corporate family rating and B2-PD probability of default rating for MHGE Parent, LLC and the ratings on existing HoldCo notes issued by MHGE Parent at Caa1.

The agency also assigned a Ba3 rating to proposed $1,655,000,000 senior secured credit facility and a B3 rating to the proposed $670 million senior unsecured notes to be issued by McGraw-Hill Global Education Holdings, LLC (a subsidiary of MHGE Parent).

The outlook is stable.

Proceeds, along with $160 million in balance sheet cash (as of Dec. 31, 2015 and pro-forma for the transaction) will be used to repay McGraw-Hill Higher Education, LLC and McGraw-Hill School Education Holdings, LLC existing senior secured debt and pay $300 million dividend to the existing shareholders.

Moody’s said the proposed $1.66 billion senior secured credit facilities benefit from the subordination of proposed $670 million senior unsecured notes and $500 million existing HoldCo notes, resulting in a two-notch tranche uplift from corporate family rating to Ba3, LGD2 instrument rating.

The proposed $670 million senior unsecured notes are rated B3, LGD5 due to their subordination to the senior secured credit facilities, but ranking in higher priority to existing $500 million HoldCo notes, which maintain current ratings of Caa1, LGD6.

The agency elevated concerns regarding the company's financial policy remain as management continues to favor shareholder dividends in lieu of de-levering, distributing $300 million in proceeds in the proposed transaction.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.