Moody's rates Palm loans Ba3

Moody's Investors Service said it assigned B1 corporate family and probability-of-default ratings and an SGL-2 speculative grade liquidity rating to Palm, Inc. and Ba3 (LGD3, 42%) ratings to its $40 million senior secured revolving credit facility due 2012 and $400 million senior secured first-lien term loan due 2014.

The outlook is stable.

The company is using the debt financing, along with $229 million in balance sheet cash and $325 million in preferred equity contributions from Elevation Partners, to provide shareholders a one-time dividend of $934 million. The agency said the transaction brings the company's adjusted debt-to-pro forma EBITDA ratio to 3.3x and lowers cash balances to $382 million.

Palm's B1 corporate family rating reflects the highly competitive and volatile nature of the converged mobile device market, the company's relatively small market share in the smartphone business and Palm's recently declining revenues and EBITDA and the expectations of continued decline in EBITDA, Moody's said.

The rating is supported by the company's good market position in small to medium business smartphone markets, the company's history of developing user-friendly products with a loyal customer base, the high growth expectations of the converged mobile device market and Palm's modest financial leverage with significant liquidity.

© 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.