Moody's assigns B3 to Project Sky

Moody's Investors Service said it assigned Project Sky Merger Sub, Inc. (Cloudera) a B3 corporate family rating and a B3-PD probability of default rating.

Concurrently, Moody's gave a B2 rating to Cloudera's planned senior secured first-lien bank credit facilities, consisting of a $250 million revolving credit facility and a $1.64 billion term loan B. The agency also assigned a Caa2 rating to Cloudera's proposed $500 million senior secured second-lien term loan B.

“Cloudera's B3 CFR reflects the company's very high adjusted leverage of well over 10x based on estimated results as of the LTM period ended April 30, 2021, pro forma for the proposed debt issuance. However, when adjusting for stock-based compensation and change in deferred revenue, Cloudera's pro forma cash adjusted leverage is more moderate at approximately 8x. As the company's recent restructuring and integration expenses roll off, cash adjusted leverage will decline toward 7x,” the agency said in a press release.

Moody's said it also sees continuing improvement in Cloudera's profitability which will lead to annualized free cash flow to gross adjusted debt maintained in the low single-digit range over the next 12-18 months.

The loan proceeds will be used in combination with new sponsor equity to finance the acquisition of Cloudera, Inc. by affiliates of Clayton, Dubilier & Rice and KKR & Co.

The outlook is stable.

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