S&P boosts Genesys Cloud Services

S&P said it raised its ratings on Genesys Cloud Services Holdings II LLC, its secured term loans and revolver to B from B-.

“We expect Genesys will rapidly reduce its leverage in fiscal year 2024 by significantly expanding its EBITDA margin. The upgrade reflects our expectation that the company will reduce its leverage to the mid-5x area this fiscal year by increasing its EBITDA margins to the 26%-27% range on lower-than-expected restructuring costs, cost savings from its prior actions, and operating leverage gains. Genesys now expects to incur about $50 million of cash restructuring costs this fiscal year, related to settlements with its cloud vendors, which is half the amount we previously expected,” S&P said in a statement.

The agency said it now expects the company's leverage will be well below the previous rating upside threshold of 7.5x. “At the same time, we note that Genesys' financial-sponsor ownership could potentially lead it to undertake re-leveraging transactions, such as a debt-funded dividend.”

The outlook is stable.

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