Moody’s cuts Open Text, rates notes Ba1

Moody's Investors Service said it downgraded Open Text Corp.'s corporate family rating to Ba2 from Ba1, the ratings for its senior secured credit facilities to Ba1 from Baa2, and the ratings for its senior unsecured notes to Ba3 from Ba2. The agency also assigned a Ba1 rating to Open Text's planned senior secured notes and affirmed the Ba1 rating for the company's senior secured delayed-draw term loan. Open Text's SGL-1 speculative grade liquidity rating is unaffected by the rating action.

These downgrades conclude the review of certain of Open Text's ratings started on Aug. 29, following Open Text's announcement it plans to buy Micro Focus in an all-cash transaction for about $6 billion, Moody’s said. Open Text expects to close the deal in the first calendar quarter of 2023. Open Text’s leverage (Moody’s adjusted) is expected to spike to the mid-4x range pro forma for the purchase from 3.6x.

The proceeds and delayed-draw term loan will be used toward the financing of the acquisition of Micro Focus International plc.

The outlook is stable.

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