Moody’s shifts view on WorldStrides to negative

Moody’s Investors Service said it changed the outlook for WorldStrides to negative from stable on raising a $50 million incremental term loan for an acquisition.

“The negative outlook reflects that the incremental acquisition debt is occurring at a time when WorldStrides’ leverage and free cash flow weakly position the company in the rating category. Proforma for the transaction adjusted debt-to-EBITDA is slightly above 8.0x and free cash to debt is roughly 4% (adjusting for the $19 million share repurchase recorded in working capital) for the twelve months to June 2019. Leverage and free cash flow based on reported results are considerably weaker than these levels, and the large adjustments on the existing business and for the proposed acquisition limit the visibility into sustainable profitability levels,” said Moody’s in a press release.

Moody’s also affirmed WorldStrides’ B2 corporate family rating, B2-PD probability of default rating and the B1 ratings on the first-lien senior secured revolver, term loan and delayed-draw term loan.

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