S&P rates SmartBear, facility B-

S&P said it assigned B- ratings to Smokey TopCo Ltd. (SmartBear Software) and its proposed first-lien facility, consisting of a $50 million revolving credit facility due 2025 and a $385 million first-lien term loan due 2027. The borrower is AQA Acquisition Holding, Inc. The recovery rating is 3.

SmartBear will use the proceeds to refinance its credit facilities. Vista Equity Partners also agreed to invest in the company.

The B- issuer rating reflects the company’s high initial S&P Global Ratings-adjusted pro forma leverage of about 12x as of the transaction close, and its expectation leverage will remain above 10x through the next 12 to 24 months, the agency said.

The outlook is stable. “The stable outlook reflects our expectation that despite high leverage, SmartBear will sustain revenue growth in the mid-to high-teens percent area while maintaining modest margins and cash generation,” S&P said in a press release.

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