S&P cuts Legal Search

S&P said it lowered its ratings for Legal Search Holdings Pty Ltd. to B- from B and its second-lien senior secured notes to CCC from CCC+. The agency affirmed the first-lien senior secured notes at B.

S&P said it considers Legal Search a core subsidiary of ATI Global Ltd. because it contributes 70%-80% of ATI’s revenue. The agency downgraded ATI’s group credit profile, citing its elevated leverage.

“Our downgrade of Legal Search follows our downward revision of ATIG's GCP to b- from b. In our view, ATIG's credit quality has weakened. The company has drawn down net proceeds of A$637 million on its PIK debt facility. This increased its adjusted gross debt-to-EBITDA ratio to 12.6x in fiscal 2022 from 6.4x in fiscal 2021,” the agency said in a press release.

“We believe a weaker parent could divert assets from its subsidiaries or burden them with liabilities during financial stress. Therefore, our rating on Legal Search is based on our view of ATIG's tolerance for high financial leverage and its willingness to undertake debt-funded acquisitions. Given the deterioration in ATIG's credit quality, we equate Legal Search's credit quality with our b- credit assessment of ATIG,” S&P explained.

The outlook is stable.

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