Moody's rates Datatel loans Ba3, B3

Moody's Investors Service said it assigned Datatel, Inc. a B1 corporate family and probability-of-default ratings, Ba3 ratings (LGD3, 32%) to the proposed $165 million first-lien senior secured term loan and the proposed $40 million revolving credit facility, and a B3 rating (LGD5, 86%) to its proposed $100 million second-lien senior secured term loan facility.

The outlook is stable.

Proceeds will be used to repay obligations under its existing first- and second-lien facilities.

Moody's said the action follows the company's announcement that it has agreed to be acquired by private-equity sponsors Hellman & Friedman LLC and JMI Equity in a leveraged buyout for $570 million.

Datatel's B1 corporate family rating reflects its solid and defensible market position as a leading administrative systems supplier of enterprise resource planning software solutions for the North American higher education market, the agency said.

The rating is also supported by Datatel's high levels of recurring maintenance revenue, coupled with very high customer retention rates, predictable profit and good cash flow generation, the agency noted.

Ratings are constrained by Datatel's small size and scale, its niche market focus and its high pro forma leverage financial leverage of 5.4x, the agency noted.

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