S&P rates LogMeIn, loans, notes B-, second-lien loan CCC

S&P said it assigned LogMeIn Inc., its proposed $1.95 billion first-lien term loan and $750 million of first-lien senior secured notes B- ratings with 3 recovery ratings assigned to the debt.

The agency also assigned a CCC rating with a 6 recovery rating to the company’s $500 million second-lien term loan. LogMeIn will also secure a $250 million revolver expected to be undrawn at close.

Francisco Partners will use about $1.4 billion of equity and the proceeds to acquire the company.

“The B- issuer credit rating reflects LogMeIn’s high initial adjusted leverage (excluding planned cost control) about 9x as of May 31, 2020. The rating also reflects LogMeIn’s moderate scale within a highly competitive industry with low barriers to entry and several substitutes. However, the company’s highly recurring revenue base, low customer concentration, and the opportunity to substantially optimize costs partly offset these weaknesses,” S&P said in a press release.

The outlook is positive.

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