S&P rates Veeam Software, loan B-

S&P said it assigned B- ratings to Veeam Software Holding Ltd. and its proposed first-lien term loan and revolving credit facility.

Insight Partners is acquiring the company for about $5.2 billion. The transaction will be partially funded with a $1.25 billion first-lien term loan (secured under a new credit facility) and $850 million in unsecured PIK notes. The recovery rating of 3 was assigned to the loans and indicates expectations of meaningful (50%-70%; rounded estimate: 55%) recovery in the event of default. The remaining funds will consist of cash on hand, founder equity and new insight equity (totaling about $3.1 billion).

“The rating on Veeam primarily reflects the company's aggressive pro forma leverage, which we estimate will be over 10x at the end of fiscal 2020 and over 9x by the end of fiscal 2021,” said S&P in a press release.

The outlook is stable.

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