Moody’s rates Ancestry.com loan B2

Moody's Investors Service said it assigned a B2 rating to Ancestry.Com Operations Inc.’s upsized and extended senior secured first-lien credit facilities. It also withdrew parent Ancestry.com Inc.’s speculative grade liquidity rating of SGL-2.

The parent company plans to use proceeds from a new $1.15 billion seven-year loan and cash on hand to pay a dividend, repay debt and pay fees and expenses. It also plans to extend the maturity of its $100 million revolver to 2024 from 2021 and obtain covenant flexibility to use future cash flow to pay out a one-time dividend of $150 million to $160 million in December or January, the agency said.

“The dividend is a clear step-up in the aggressiveness of the company’s financial policy. Recent declines in DNA kit sales and subscribers have made future prospects more uncertain, making this an inopportune time to raise leverage aggressively,” said Harold Steiner, Moody's lead analyst for Ancestry, in a news release.

The outlook for both companies was changed to negative from stable.

Moody’s affirmed parent Ancestry.com’s corporate family rating of B2 and probability of default rating B2-PD.

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