Moody’s cuts Sophos loans

Moody’s Investors Service said it downgraded Sophos’ senior secured first-lien term loan and senior secured revolving credit facility to B3 from B2. Sophos plans to obtain a $380 million add-on term loan to its $1.56 billion equivalent first-lien term loan. The loans are borrowed at subsidiary Sophos Holdings, LLC.

Loan proceeds and balance sheet cash will be used to repay Sophos’ $420 million senior secured second-lien term loan. The repayment will save Sophos about $20 million a year in interest payments.

The agency also affirmed Sophos’ B3 corporate family and B3-PD probability of default ratings.

“The envisaged increased first-lien senior secured term loan and the RCF will no longer benefit from the subordinated debt cushion that the second lien provided and, as a consequence, their instrument ratings have been aligned with the CFR. The transaction will also lead to a slight reduction in leverage and lower interest payments.” said Luigi Bucci, Moody’s lead analyst for Sophos, in a press release.

The outlook is stable.

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