Moody's rates EVO revolver B2, view positive

Moody's Investors Service said it affirmed EVO Payments International, LLC's B2 corporate family rating and B2-PD probability of default rating.

The agency also assigned a B2 rating to the proposed new revolver.

The outlook was revised to positive from stable.

EVO plans to use net initial public offering proceeds and borrowings from the new revolver to repay the existing $175 million second-lien term loan and $63 million seller note. Proceeds also will be used to fund acquisition activity.

The existing revolver and second-lien term loan ratings will be withdrawn upon full repayment.

Upon the repayment of the second lien term loan, Moody's said it expects to downgrade the existing first-lien term loan rating to B2 from B1.

With debt reduction of $238 million upon closing of the IPO, EVO's adjusted leverage will improve to about 5x from the mid-6x range.

Moody's said it believes that while the lower leverage strengthens EVO's credit profile, the uncertainty regarding the inflection point for generating positive free cash still weighs on the company's B2 corporate family rating.

The agency said it expects that EVO will generate organic net revenue growth in the high single digits and double-digit profit growth.

But ongoing investments to support the growth will lead to slightly negative to flat free cash flow for 2018 and this follows three years of negative free cash flow, Moody's said.

© 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.