S&P rates Compuware loans B

S&P said it affirmed its B issuer credit rating on Compuware Corp. The outlook is stable.

At the same time, the agency assigned its B issue-level and 3 recovery ratings to the company's new $60 million first-lien senior secured revolving credit facility expiring in 2023 and $475 million first-lien senior secured term loan due in 2025.

The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 50%) recovery in the event of default.

Compuware entered into a transaction to separate subsidiary Dynatrace LLC and refinance its existing senior secured term loans.

The company will fund the transaction with the $60 million first-lien revolver, $475 million first-lien term loan and rollover noncommon equity treated as debt under S&P's adjustments, the agency said.

“The rating on Compuware is principally supported by robust free cash flow conversion of more than 50% of revenue, a leading market share within the mainframe development tools software market, and an efficient cost structure,” the agency said in a news release.

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