Moody's drops Micro Focus view to negative

Moody's Investors Service said it changed the outlook for Micro Focus International plc, MA FinanceCo., LLC and Seattle Spinco, Inc. to negative from stable.

"The change in outlook to negative from stable largely reflects our expectation of weaker than expected free cash flow generation over the next 12-18 months on the back of continued high levels of exceptional items and reduced EBITDA," said Luigi Bucci, Moody's lead analyst for Micro Focus, in a press release.

The agency also affirmed the B1 corporate family rating and B1-PD probability of default rating and the B1 ratings on the senior secured bank credit facilities borrowed at subsidiaries MA FinanceCo and Seattle Spinco.

"Risks to maintaining its B1 rating have increased for Micro Focus with leverage likely to remain high at around 4.5x-5.5x over the next 12-18 months. The recently announced cost savings will start supporting deleveraging only from fiscal 2023 when EBITDA is expected to start growing again" added Bucci.

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