Moody's rates Attachmate loans B1, Caa2

Moody's Investors Service said it affirmed Attachmate Corp.'s B3 corporate family and probability-of-default ratings and assigned B1 (LGD2, 29%) ratings to the company's $20 million revolving credit facility and $480 million first-lien term loan and a Caa2 (LGD5, 83%) rating to its $275 million second-lien term loan.

The outlook is stable.

The company is refinancing and upsizing its credit facilities in connection with the upcoming payment of a debt-financed $280 million dividend. The agency said that while the dividend will significantly increase leverage, the increased risk is offset by the progress management has made in restructuring and integrating the NetIQ acquisition. Management appears to have also stemmed the rapid decline in revenues that NetIQ had been experiencing prior to the acquisition.

The B3 rating reflects the company's high leverage combined with the flat to declining prospects in Attachmate's core mainframe business and uncertainty around the growth prospects of NetIQ's product lines, Moody's said.

Attachmate's core business continues to show resilience and in the near term should be positively impacted by Microsoft's introduction of Vista, the agency noted.

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