Moody’s assigns Sesac facilities B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Sesac Holdco II LLC (New) and a B2 rating to its proposed first-lien credit facilities and a Caa2 to its new second-lien facility.

Sesac is being acquired by Blackstone's private equity group in a leveraged buyout (LBO) from Rizvi Traverse Management.

The outlook is stable.

Moody’s said the B3 corporate family rating reflects Sesac's small scale relative to competitors and high pro forma financial leverage following the LBO, increasing to 7.4 times total debt to EBITDA (as of Sept. 30, 2016, incorporating Moody's standard and non-standard adjustments, including estimates for cost savings, pro forma earnings and deferred revenue, and excluding certain non-recurring costs) from 6.6 times, and the agency’s belief that Sesac will face some challenges in deleveraging.

Sesac is targeting total debt to EBITDA of 5.9 times (Moody's adjusted) at the end of fiscal year 2019 (ending March).

However, the agency said it believes the company will be highly reliant on earnings improvement due to free cash flow that will be weaker than recent levels as a result of higher interest expense associated with the increased debt.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.