Moody’s: Open Text notes Ba2

Moody’s Investors Service said it assigned a Ba2 rating to OpenText Corp.’s proposed senior unsecured notes due in 2024.

The Ba1 corporate family rating and all other ratings are unchanged.

The outlook remains negative.

The proceeds of the new notes will be used to refinance the outstanding balance of the $600 million senior secured term loan A and for general corporate purposes, including the funding of OpenText’s recently announced acquisition of Actuate, Inc., Moody’s said.

Upon the closing of the offering, the agency said it expects to assign a Baa3 rating to the new $300 million secured revolving credit facility, upgrade the $800 million senior secured term loan B to Baa3 from Ba1 and revise the probability of default rating to Ba1-PD from Ba2-PD.

The expected upgrades reflect the introduction of unsecured debt into the capital structure and reduction of outstanding secured debt, Moody’s said.

The ratings also continues to reflect OpenText’s leading position within the enterprise content management market and the company’s modest, though increased financial leverage and strong free cash-flow generation capabilities, the agency said.

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