Moody's assigns McAfee B3, loans B2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to McAfee Corp. upon its acquisition by private equity buyers. Moody's also assigned a B2 rating to the planned first-lien revolver and term loan facilities.

The debt facilities along with yet to be placed secured and unsecured notes and about $6 billion of new equity will be used by private equity firms Permira, Advent and Crosspoint to acquire McAfee. The transaction is expected to close in the first half of 2022. The current ratings on McAfee, LLC will be withdrawn upon closing and full repayment of the current debt.

“McAfee's B3 CFR reflects the company's very high initial leverage offset by its leading position in the consumer endpoint security markets and track record of steady revenue growth. Debt to EBITDA will be around 10x pro forma for the acquisition based on trailing September 2021 results (excluding stranded costs, public company costs, and certain one-time expenses) and about 9x on a cash EBITDA basis,” the agency said in a press release.

The outlook is stable. “Moody's expects the company can de-lever towards 8x over the next two years based on continued revenue growth unless they pursue debt funded acquisitions.”

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