S&P rates Ontic B-

S&P said it assigned B- ratings to Bleriot Midco Ltd. (Ontic) and its first-lien credit facilities with a recovery rating of 4.

The agency also assigned a CCC rating with a recovery rating of 6 to Ontic’s second-lien loan.

“The rating reflects our view that Ontic holds leading niche market positions and exhibits high reported EBITDA margins, but requires the ongoing acquisition of new intellectual property (IP) licenses to materially grow the business and reduce leverage. We view the capital structure as very highly leveraged. Ontic is smaller in terms of its scale and revenue and EBITDA base than its rated peers,” said S&P in a press release.

The company is being acquired by CVC Partners and is raising $1.3 billion as part of the deal. The debt will consist of an $85 million revolver, a $480 million term loan, a $175 million second-lien loan, and a $75 million delayed-draw term loan. Post execution of financing, the interest rate on the first-lien term loan is Libor plus 475 bps, and the interest rate on the second-lien term loan is Libor plus 850 bps all in, S&P said.

“The financing package priced slightly above our initial expectations, which has reduced headroom under the rating. This is partially mitigated by the ability of the company to reduce its spending on the acquisition of intellectual property (IP) (which we treat as capital expenditure), reducing cash burn in the medium term,” said S&P.

The outlook is stable.

© 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.