Moody's rates Campaign Monitor, loans B2

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to Campaign Monitor Finance Pty Ltd. following its business combination with Cheetah Digital. Moody's also gave a B2 rating to the company's planned first-lien senior secured credit facility, consisting of a $45 million revolver and a $590 million term loan.

The proceeds and rolled common equity from Insight Venture Partners and Vector Capital will be used to finance a business combination between CM Group and Cheetah Digital, repay debt and pay related fees and expenses.

"The benefits of increased scale, customer diversification and the strategic fit from the proposed merger only partially mitigate the merged company's financial risk profile. Initial debt-to-EBITDA leverage is high, estimated at around 5.7x at June 30, 2021 (pro forma for the transaction), and the prospects for deleveraging are limited given ongoing revenue attrition in the legacy brands and expectation for modest new subscriber growth," said Oleg Markin, a Moody's assistant vice president, in a press release.

The outlook is stable, reflecting the view the company will continue its core subscriber growth, while also improving customer retention rates and profitability. “Moody's expects debt-to-EBITDA will be sustained below 5.5x over the next 12-18 months.”

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