Moody’s rates Barolo Midco notes Caa2

Moody’s Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Barolo MidCo SpA (TeamSystem).

Moody’s also said it withdrew the B2 corporate family rating of TeamSystem Holding SpA, including the B2-PD probability of default rating.

Moody’s also said it affirmed the B2 rating on the €430 million senior secured notes issued by TeamSystem Holding and assigned a Caa2 rating to the €150 million senior notes issued by Barolo MidCo.

The outlook is stable.

The proceeds from the transaction have been used to partially finance the acquisition of TeamSystem by funds managed by Hellman & Friedman LLC and pay related fees, Moody’s said.

As part of the transaction, the company also issued a new super senior revolving credit facility of €65 million. Hellman & Friedman owns about 77% stake of TeamSystem with the remainder held by HG Capital and management, the agency said.

The ratings reflect TeamSystem’s strong market position in the Italian ERP market supported by high retention rates, high proportion of recurring revenues and complex local accounting and legal framework, which provides a degree of protection against larger international competitors, Moody’s said.

The ratings are constrained by TeamSystem’s high opening leverage with pro forma adjusted debt-to-EBITDA of 7.7x as of December 2015, the agency said.

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