Moody's Changes Micro Focus Outlook To Stable; Affirms Ratings

(Alliance News) - Moody's Investors Service on Wednesday assigned a B1 rating to Micro Focus ...

Alliance News 19 February, 2020 | 5:06PM
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(Alliance News) - Moody's Investors Service on Wednesday assigned a B1 rating to Micro Focus International PLC's proposed USD1.44 billion equivalent senior secured term loan and the new USD500 million senior secured revolving credit facility.

The ratings agency also affirmed the software company's B1 corporate family rating and B1-PD probability of default rating, as well as the B1 ratings on the senior secured bank facilities borrowed at subsidiaries MA FinanceCo LLC and Seattle Spinco Inc.

Moody's changed its outlook on all ratings to stable from positive.

"Proposed transaction is leverage neutral and will help Micro Focus to push average maturity to 5.1 years versus 3.5 years currently," Moody's said on the refinancing transaction.

"The change in outlook to stable from positive reflects the ongoing challenges Micro Focus faces to stabilise its revenue in a difficult operating environment, coupled with the ongoing internal efforts to reduce costs and to refocus sales and productivity. As a result, we anticipate Moody's-adjusted debt/Ebitda to be over 4x over fiscal 2020 and 2021," said Luigi Bucci, Moody's lead analyst for Micro Focus.

The stable outlook reflects Moody's expectation that the company will continue to generate solid free cash flow and will reduce leverage, although slowly, after fiscal 2020. It also reflects Moody's expectation of a reduced rate of decline in revenue over the second half of financial 2020 and financial 2021 and broadly stable earnings before interest, tax, depreciation and amortisation over the same period.

Shares in the Newbury-based software company closed at 801.20 pence each in London on Wednesday, up 1.9%.

By Tapan Panchal; tapanpanchal@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Micro Focus International PLC 395.30 GBX -1.18 -

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