Moody’s rates Project Ruby loan B2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Project Ruby Ultimate Parent Corp., which is an entity set up to acquire Mediware Information Systems, Inc.

The agency also said it assigned B2 (LGD 3) ratings to the company's proposed senior secured first-lien term loan and revolving credit facility.

The proceeds from the debt issuance, along with unrated second-lien notes and new equity, will be used to fund TPG Capital's acquisition of the business.

The outlook is stable.

The ratings reflect Mediware's high leverage levels, small scale and acquisition appetite, which is offset to by the company's stable and predictable base of software maintenance and subscription revenues, Moody’s said.

The company’s pro forma debt-to-EBITDA ratio is estimated at about 7x for the period ending Dec. 31, 2016, the agency said.

Due to temporary increases in research and development expenditures, leverage is expected to exceed 8.5x for the fiscal year that ended June 30, 2017, Moody’s said.

This ratio is expected to decline to about 7x over the next 12- to 18-months, driven by EBITDA growth and debt repayment, as well as the runoff of extraordinary expenditures, the agency said.

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