Moody's rates Simon & Schuster B2

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Century DE Buyer LLC (Simon & Schuster) and a B2 to the company's senior secured first-lien credit facilities consisting of a five-year revolver and a seven-year term loan. The outlook is stable.

Kohlberg Kravis Roberts & Co. Partners LLP will use the term loan and new cash equity to buy Simon & Schuster from Paramount Global for $1.62 billion, pay associated fees and expenses and fund cash to the balance sheet.

“Simon & Schuster's B2 CFR reflects its high financial leverage at the close, limited free cash flow and modest expected revenue growth in the low single digits that is dependent on the success of frontlist releases. The company's narrow product focus results in a highly concentrated customer base with the top three customers comprising two-thirds of its revenue,” Moody’s said in a press release.

Pro forma leverage for the transaction is estimated at 5.3x debt/EBITDA (Moody's adjusted) as of the last-12 months ended June 2023.

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