Moody's cuts Datatel, rates new loans B1, Caa1

Moody's Investors Service said it downgraded Datatel, Inc.'s corporate family and probability of default ratings to B2 from B1.

The agency also said it assigned B1 (LGD 3, 32%) ratings to its proposed $40 million first-lien revolver due 2016 and proposed $255 million first-lien term loan due 2017, along with a Caa1 (LGD 5, 86%) rating on its proposed $135 million second-lien term loan due 2018.

The proceeds will be used to refinance $277 million of existing debt and fund a $110 million dividend to its shareholders.

The outlook is stable.

The Ba3 (LGD 3, 32%) ratings on its $40 million first-lien revolver due 2014 and $165 million first-lien term loan due 2015 will be withdrawn upon repayment, along with the B3 (LGD 5, 86%) rating on its $100 million second-lien term loan due 2016.

The downgrade primarily reflects the high financial risk tolerance and shareholder orientation of the company's financial sponsors, Moody's said.

The ratings also consider the company's strong and defensible market position as a leading provider of enterprise resource planning software solutions to the North American higher education institutions, the agency said.

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