Fitch rates Sophos loan B

Fitch Ratings said it assigned an expected rating of B/RR3 to the $125 million senior secured revolving credit facility and $1.43 billion first-lien senior term loan to be used in the leveraged buyout of Sophos Group plc. The $520 million second-lien senior term loan is not being rated. Surf Holdings Sarl and Surf Holdings, LLC are co-borrowers for the revolver and term loans. The proceeds along with an equity contribution from Thoma Bravo, will be used to fund the acquisition of Sophos.

Fitch also assigned a B- rating to Surf Intermediate I Ltd, operating as Sophos.

Thoma Bravo announced on Oct. 14, its plan to acquire Sophos for about $4.1 billion. The acquisition will be financed with $1.95 billion in term loans and equity contribution from Thoma Bravo.

Fitch said it believes the private equity ownership of Sophos could limit deleveraging as its equity owners seek to optimize ROE. Fitch forecasts gross leverage to remain over 7x and FFO adjusted leverage to decline to below 7x by FY 2024 through Fitch-expected organic growth and cost efficiency improvements. The operating and leverage profiles are consistent with the B- rating category.

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