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S&P rates CM Cheetah, loan B
S&P said it assigned B ratings to CM Cheetah LP and its planned $590 million seven-year first-lien term loan. CM Cheetah also plans to obtain a $45 million revolver. Campaign Monitor Finance Pty Ltd. and Finco US will be the co-borrowers on the term loan.
CM Group plans to merge with Cheetah Digital. The company’s pro forma S&P Global Ratings'-adjusted debt to EBITDA is expected to be about 6.5x-7x, the agency said. Sponsors will provide about $1.7 billion of common equity.
“The rating primarily reflects the highly fragmented and competitive nature of the email marketing industry, the company's low market share, execution risk associated with aggressive cost-cutting, and S&P Global Ratings'-adjusted leverage above 5x for the next few years. Partially offsetting these factors are the company's sticky customer base, highly recurring subscription-based revenues and modest ongoing capital spending requirements, resulting in favorable cash flow conversion rates,” the agency said in a press release.
The outlook is stable.
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