| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers C > Headlines for Co-Borrower One Identity > News item |
Moody's downgrades Seahawk
Moody's Investors Service said it downgraded Seahawk Holdings Ltd.'s corporate family rating to B3 from B2 following news that it will spin off SonicWall, refinance existing debt and make a distribution to shareholders.
The downgrades were driven by the increase in leverage while the company is still in the early stages of turning performance around, the agency said.
The remaining company will consist of the Quest and One Identity businesses, which have collectively experienced several years of declines, Moody's said.
Moody's also rated Borrower Quest's and Co-Borrower One Identity's proposed first-lien debt facilities B2 and proposed second-lien facility Caa2.
The ratings on Seahawk's existing debt will be withdrawn at closing, the agency said.
The proposed debt will be used, along with a separate SonicWall financing package, to refinance existing debt and fund a distribution to shareholders, Moody's said.
The outlook also was revised to stable from negative following the downgrade, the agency added.
The ratings reflect the company's high financial leverage and challenges in stabilizing revenues, Moody's said.
While performance improved in the quarter that ended Jan. 31, revenues have been declining for several years and the separation from Dell, Inc. appears to have exacerbated the declines at Quest and to a lesser extent One Identity, the agency explained.
The ratings also consider the strong respective niche positions of Quest Software and One Identity and strong cash balances, Moody's added.
Leverage is estimated to be more than 7x at closing, the agency said.
But if the company can achieve modest growth, leverage should trend less than 6x over the next 18 months as separation-related expenses decline and cost cuts flow through the income statement, Moody's 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.