S&P assigns Sophia loan B

S&P said it assigned its B issue-level and 2 recovery ratings to Sophia LP's (Ellucian) proposed $1.6 billion senior secured first-lien term loan due 2027 and $150 million revolving credit facility due 2025. The 2 recovery rating indicates expectations for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a default.

The proposed $540 million senior secured second-lien term loan due 2028 will be privately placed and unrated. All of our other ratings on Sophia are unchanged.

Ellucian plans to use the proceeds and $72 million of cash to fund a $298 million dividend to shareholders and refinance its outstanding debt of $1.852 billion. The dividend is the first under its current ownership. The loan improves its debt maturity profile by extending the maturity of its debt to 2027 and 2028 from 2022 of $1.362 billion and 2023 of $540 million, S&P said.

“Pro forma for the proposed debt issuance, June 2020 leverage will rise to 8.5x from 7.8x. We expect leverage to stay in the mid-8x area through fiscal 2020 and improve to the low-8x area in 2021,” the agency said in a press release.

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