S&P rates Compuware loans BB-, B, CCC+

Standard & Poor’s said it assigned its preliminary B corporate credit rating to Compuware Holdings LLC. The outlook is stable.

At the same time, S&P assigned a preliminary BB- issue-level rating and a preliminary 1 recovery rating to the company’s proposed $105 million senior secured asset sale facility. The 1 recovery rating indicates an expectation for very high (90% to 100%) recovery of principal in the event of a default.

S&P assigned a preliminary B issue-level rating and a preliminary 3 recovery rating to the company’s proposed $1.35 billion senior secured first-lien term loan. The 3 recovery rating indicates an expectation for meaningful (50% to 70%) recovery of principal in the event of a default.

S&P also assigned a preliminary CCC+ issue-level rating and preliminary 6 recovery rating to the company’s $550 million second-lien term loan. The 6 recovery rating indicates an expectation for negligible (0% to 10%) recovery of principal in the event of a default.

“The ratings reflect our assessment of Compuware’s business risk profile as ‘weak,’ incorporating its relatively narrow market focus in the large global software market, declining revenues in the company’s higher-margin mainframe segment, and historically weak, but improving, profitability,” said S&P credit analyst Martha Toll-Reed in a news release.

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