S&P lowers Applied Systems first-lien debt

S&P said it revised its recovery rating to 3 from 2 on Applied Systems Inc.'s first-lien term loan and revolving credit facility. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery for lenders in the event of a payment default.

At the same time, the agency lowered its issue-level rating on the first-lien debt to B- from B in accordance with S&P’s notching criteria for a 3 recovery rating.

All of the other ratings on Applied Systems are unchanged.

“The rating actions reflect our view of Applied Systems' plan to increase its first-lien term loan by $210 million (from the $1.03 billion issued in September 2017), and its second-lien term loan by $60 million (from the $495 million issued in September 2017),” S&P said in a news release.

“The proceeds of the debt will be used to fund a $200 million distribution to shareholders, with the remainder going to the balance sheet net of transaction expenses. This will be the third debt-funded dividend in about two years, following a $171 million dividend in October 2016 and a $390 million dividend in October 2017.”

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