S&P rates Dell International loan BBB-

S&P said it assigned its BBB- issue-level rating and 2 recovery rating to Dell International LLC's $1 billion term loan A-4 due December 2023 (EMC Corp. is co-borrower). The 2 recovery rating indicates an expectation for substantial (70%-90%; rounded estimate: 75%) recovery in the event of a payment default.

Dell International LLC and EMC Corp. are wholly owned subsidiaries of Dell Technologies Inc., a global information technology solutions provider. The company will use the proceeds from the proposed term loan to partially fund an optional cash election of up to $14 billion to exchange its publicly-traded class V tracking stock (DVMT) for its class C common stock.

All of S&P’s other ratings on Dell Technologies Inc. remain unchanged.

“The negative outlook on Dell Technologies Inc. reflects our view that the company's pro forma leverage is high, in the mid-4x area as of the quarter ended Nov. 2, 2018, when including the proposed $5 billion incremental debt issuance related to the tracking stock conversion transaction,” S&P said in a news release.

“We anticipate that the company's leverage will decline to 4x or below by the end of its fiscal second quarter 2020 (August 2019) on a slight EBITDA improvement and some debt repayment using its free operating cash flow generation.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.