S&P rates Sophos loans B+

Standard & Poor's said it assigned a preliminary B long-term corporate credit rating to Sophos plc and a preliminary B+ rating to the proposed $90 million equivalent term loan A due in 2016, the proposed $210 million term loan B maturing in 2017 and the proposed $20 million revolving credit facility maturing in 2016 that are to be issued by finance subsidiary Lux Finance Co. The recovery rating is 2.

These debt instruments will be guaranteed by Sophos BidCo Ltd., Sophos HoldCo Ltd. and Sophos plc.

The outlook is stable.

"The preliminary corporate credit rating on Sophos is constrained by our view of the group's highly leveraged financial risk profile and our anticipation of modest cash generation after sizeable interest charges," S&P analyst Helen O'Toole said in a statement.

"Further constraints on the rating are the highly competitive market for security software and antimalware technologies worldwide; the constantly evolving industry and shifts in security technology; and the relatively high operational leverage at Sophos, which we think would result in much weaker profitability if revenues were to decline."

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