S&P rates Carbonite loans B

S&P said it assigned a B issuer credit rating to Carbonite Inc., along with a B rating and 3 recovery rating to Carbonite's proposed first-lien term loan and revolving credit facility.

Carbonite announced an agreement to acquire Webroot for $618.5 million in an all-cash transaction, the agency said.

The company will fund the transaction with existing cash on hand and funds secured under a new credit facility, S&P said.

The ratings reflect the company's niche focus on small- to midsize businesses, fierce competition in the rapidly evolving data protection and storage software market, along with limited scale compared with incumbent competitors, the agency said.

Credit strengths include a rapidly growing recurring revenue base, above-industry bookings growth, well-diversified customer base and high customer retention rates for the market, S&P said.

The positive outlook reflects an expectation that Carbonite will be able to reduce adjusted pro forma leverage to about 5x within a year of this transaction closing, based on sustained organic revenue growth and margin expansion, the agency said.

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