Moody's rates ConvergeOne loans B2, Caa2

Moody's Investors Service said it assigned a corporate family rating of B3 to ConvergeOne Holdings, Inc., along with a probability of default rating of B3-PD.

The agency also assigned a B2 (LGD 3) rating to the company's proposed first-lien term loan and also assigned a Caa2 (LGD 5) to ConvergeOne's second-lien term loan.

The action follows news that the company plans to be acquired by affiliates of CVC Fund VII in an all-cash transaction valued at about $1.8 billion.

The outlook is stable.

Upon completion of this leveraged buyout transaction, which is expected to close in the first quarter of 2019, Moody's said it expects the debt of the issuer's predecessor entity, C1 Holdings Corp., to be repaid.

The ratings are constrained by the company's pro forma financial leverage of about 7x as of Sept. 30, the agency said, as well as ConvergeOne's considerable revenue reliance on key vendor relationships with Cisco Systems, Inc. and Avaya, Inc., which comprise about 60% of total product sales.

The ratings also consider the risk of incremental debt-financed acquisitions, which have been integral to ConvergeOne's expansion and strategic initiatives to diversify its supplier base in recent years, Moody's said.

These risks are somewhat mitigated by the company's solid market position as a provider of integrated communications solutions and managed services to a diverse base of large enterprise customers, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.