Moody's snips System1

Moody's Investors Service said it downgraded System1, Inc.'s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and the ratings on the backed senior secured bank credit facilities, consisting of a $50 million revolving credit facility and a $400 million term loan B, to B2 from B1 issued by Orchid Merger Sub II, LLC.

Moody's said it also placed the ratings under review for further downgrade. Previously, the outlook for the issuers was stable.

“The downgrade reflects System1's elevated leverage, limited financial flexibility and continued operating challenges in one of the company's owned and operated verticals. Sales at System1, after reaching a peak in 2022, have been declining due to market changes. This has led to weakening liquidity and profitability,” the agency said in a press release.

However, “Moody's believes that the impact on System1's revenues and profitability have largely been absorbed and Moody's expects revenues in the search engine marketing vertical to remain stable or grow modestly over the coming quarters. The ratings were placed on review for downgrade to reflect the potential for heightened liquidity pressures absent a near term sale of the company's total security division and uncertainty as to the business profile and financial policies after a potential asset sale,” the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.