S&P assigns BBB to Open Text loan

Standard & Poor's said it assigned its BBB issue-level rating and 1 recovery rating to Open Text Corp.'s proposed $800 million term loan B, issued by wholly owned subsidiary Ocelot Merger Sub Inc. The 1 recovery rating reflects an expectation of very high (90%-100%) recovery in the event of default.

At the same time, S&P affirmed all other ratings on Open Text, including its BB+ long-term corporate credit rating on the company.

"Open Text plans to acquire GXS Group Inc. in a US$1.165 billion transaction financed with a US$800 million term loan, US$265 million of balance-sheet cash, and US$100 million of equity," said S&P credit analyst David Fisher in a news release.

Despite the transaction being primarily debt-financed, S&P said it expects Open Text's credit measures to remain in line with what the agency views as an "intermediate" financial risk profile.

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