Moody's assigns Digital Media, loans B2

Moody's Investors Service said it assigned Digital Media Solutions, LLC a B2 corporate family rating and B3-PD probability of default rating. Moody's also gave a B2 rating to its proposed senior secured first-lien bank credit facilities, consisting of a $50 million revolving credit facility and a $225 million term loan B.

“While DMS' average annual revenue has grown at a vigorous 70% pace since 2017, revenue remains small at just under $350 million, representing a de minimis market share in the digital marketing services industry. Much of this growth was fueled by M&A (47.5% inorganic/22.5% organic) that enhanced the company's digital properties to accelerate customer acquisition efforts and extend its reach into proprietary targeted media solutions across several end markets. Moody's expects continued acquisition activity as DMS seeks to add new digital properties to scale its brand direct and marketplace business segments,” the agency said in a press release.

Proceeds will be used to repay the company's $213.9 million debt consisting of a $190.54 million term loan, $8.24 million delayed draw term loan, $1.1 million of notes and $14 million of borrowings outstanding under the current revolver. The remaining proceeds will be used to add cash to the balance sheet.

Digital Media Solutions is a unit of holding company Digital Media Solutions, Inc., which is the financial reporting entity that will produce consolidating financial statements, including DMS, LLC's quarterly and annual income statements, balance sheets and cash flow statements. Digital Media Solutions Holdings, LLC, a third-tier holding company parent, will provide a downstream guarantee to the credit facilities.

The outlook is stable, reflecting Moody's view that DMS' integrated end-to-end digital marketing platform, online customer acquisition and sales center operating model will stay fairly resilient and generate solid free cash flow, the agency said.

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