Moody's assigns McAfee Enterprise B3

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to first-time issuer Magenta Buyer LLC (McAfee Enterprise). Moody's also assigned a B2 rating to the proposed first-lien credit facilities and a Caa2 rating to the proposed second-lien credit facility.

The credit facilities, along with sponsor equity will be used to fund the acquisition of McAfee Corp.'s enterprise business by a group led by private equity firm Symphony Technology Group for roughly $4 billion as part of a carve-out transaction.

“The B3 CFR reflects McAfee Enterprise's high initial leverage and execution risks separating as a stand-alone company while also restructuring operations amidst the evolving cyber-security landscape. The rating also reflects the leading position the company has across multiple product categories in the security software industry. Pro forma leverage at closing is over 8x, excluding certain one-time costs, with the potential to drive leverage toward 6.5x over the next 12 to 18 months driven by STG's sizeable cost restructuring plan,” Moody’s said in a press release.

The B2 first-lien debt, a notch above the CFR, reflects its priority in the capital structure above the second-lien debt and Moody's forward expectations regarding the mix of debt, the agency said.

The outlook is positive.

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