Moody's may lower Activant

Moody's Investors Service said it placed the ratings of Activant Solutions Inc. under review for possible downgrade.

Placed under review are the company's B2 rating on its $120 million senior unsecured notes due 2010, its B2 rating on $157 million senior unsecured notes due 2011 and its B1 corporate family rating.

The review is prompted by the company's recent announcement of its intention to acquire Prophet 21, a provider of vertical market focused enterprise software and services for the distribution industry, for about $215 million, which will materially elevate Activant's debt from current levels and could increase leverage measures.

As stated in Moody's news release on Feb. 25, the ratings may encounter near term downward pressure from some combination of (i) increased total leverage to greater than 4.75x, (ii) tightened EBITDA less CapEx to interest expense to less than 1.75x, (iii) and increased difficulty remaining in compliance with the revolver's financial covenant tests.

The acquisition is expected to close by Sept. 15.

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