S&P rates SUSE

S&P said it assigned a B rating to Marcel LUX IV (SUSE)'s $700 million equivalent secured first-lien term loan and $81 million revolving credit facility.

In March 2019, private equity investor EQT completed the leveraged buyout of software solutions provider SUSE Linux from Micro Focus for about $2.5 billion.

It was funded by about $970 million of term loans and sponsor equity, S&P said.

The agency said it forecasts weak debt metrics for SUSE and see carve-out related uncertainties, while SUSE also has a small scale by revenues, strong dependency on its key server product and a lack of intellectual property compared with software peers.

The agency said it views positively the company's predominantly subscription-based business model and high free cash flow conversion.

The stable outlook reflects an expectation that strong revenue growth and adjusted EBITDA margins of 24% to 26% in the 12 months following transaction close will enable SUSE to reduce adjusted debt-to-EBITDA to less than 8x in 2020, S&P said.

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