S&P cuts Flexera Software

Standard & Poor's said it lowered the corporate credit rating on Flexera Software Inc. to B from B+ and removed it from CreditWatch, where it was placed with negative implications on July 20.

The agency assigned a B rating to Flexera's proposed $25 million senior secured revolving credit facility due 2016 and $230 million first-lien term loan due 2017. The 3 recovery rating indicates expectations for 50% to 70% recovery.

S&P also assigned a CCC+ rating to Flexera's proposed $100 million second-lien term loan due 2018. The 6 recovery rating indicates expectations for 0% to 10% recovery.

The outlook is stable.

Proceeds will be used to partly finance the company's acquisition by Ontario Teachers' Pension Plan and to repay debt.

"The rating on Flexera reflects our view that the company's highly leveraged financial profile and its private-equity ownership structure are likely to preclude sustained deleveraging," S&P analyst Andrew Chang said in a statement.

"We consider Flexera's business risk profile weak, reflecting its narrow product focus and modest scale."

The company's diverse customer base and good revenue visibility will support moderate revenue growth and consistent free cash flow generation in the near term, Chang added.

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