Moody's assigns Multiversity, notes B2

Moody's Investors Service said it assigned a first-time B2 corporate family rating and a B2-PD probability of default rating to Paganini BidCo SpA, the top holding company of Multiversity Srl. Concurrently, the agency gave a B2 rating to the planned €765 million of floating-rate senior secured notes due 2028 to be issued by Paganini BidCo.

Funds managed by CVC Capital Partners Ltd. agreed to acquire the remaining 50% in Multiversity that they do not already own from the company's founder, Danilo Iervolino in a transaction valuing the company at around €1.5 billion.

CVC will employ €42 million in equity, the notes’ proceeds and €37 million from the super-senior revolving credit facility, to fund the equity value of €800 million and pay transaction fees of around €37 million. At closing, a €222 million short-term bridge to cash facility will fund the purchase of the cash held by Multiversity SpA. The cash will be available to repay the bridge to cash facility after the merger is completed.

"Multiversity's B2 rating reflects its leading position in the online higher education segment in Italy, its good operational track record since inception, and the supportive industry dynamics from increasing demand for online education, as well as its strong free cash flow generation owing to high margins and low capex," said Agustin Alberti, a Moody's vice president senior analyst and lead analyst for Multiversity, in a press release.

"The rating also reflects its small scale, earnings concentration in the niche education online segment in Italy, its exposure to regulatory risk as well as its high initial leverage, with Moody's gross adjusted leverage estimated at 5.8x by year end 2021," added Alberti.

The outlook is stable.

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