Moody’s cuts Campaign Monitor, loans to Caa1

Moody's Investors Service said it downgraded Campaign Monitor Finance Pty Ltd.’s corporate family rating to Caa1 from B3, probability of default rating to Caa2-PD from Caa1-PD and first-lien senior secured bank credit facilities, consisting of a $10 million revolving credit facility expiring in 2019 and a $174 million term loan due 2021, to Caa1 from B3.

The outlook is stable.

Moody’s said the action was based on weaker-than-expected operating performance, increased leverage and a weakening in Campaign Monitor's liquidity position.

EBITDA margins have declined as the company has invested in growing the business, with a focus on expansion of its sales and marketing infrastructure and introduction of new products.

The agency estimates Campaign Monitor's debt to EBITDA to have increased to nearly 9 times (inclusive of Moody's standard adjustments) at Dec. 3. Debt to EBITDA ratio as defined in its bank credit agreement is around 7 times, above the maximum springing financial covenant level, which limits its effective revolver availability to about $3 million.

Moody's said it expects the company's credit metrics to remain weak in the intermediate-term as it invests in growth of the business.

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