Fitch rates Rackspace debt loans BB+, notes BB-

Fitch Ratings said it assigned first-time ratings to Rackspace Hosting Inc., including a long-term issuer default rating of BB-.

The agency also assigned a BB+ rating with recovery rating of RR1 on the company’s senior secured revolving credit facility rating, BB+ rating with recovery rating of RR1 on its senior secured term loans and BB- rating with recovery rating of RR4 on its senior unsecured notes.

The outlook is positive.

The ratings affect $3.5 billion of debt, including a $225 million secured revolving credit facility, Fitch said.

On Aug. 26, Rackspace announced that it would be acquired by private equity company Apollo Global Management LLC in an all-cash going private transaction valued at $4.4 billion, the agency explained.

Apollo plans to fund the acquisition with $3.2 billion of debt and $1.3 billion of new equity, provided by a syndicate led by Apollo in partnership with Searchlight Capital Partners, the agency said.

Apollo and Rackspace expect the deal will close by the end of 2016 pending customary approvals, Fitch said.

The agency said it expects solid growth across Rackspace's markets, driven by increased outsourcing, growth in workloads across platforms and customer adoption of hybrid cloud environments.

Fitch said it expects that outsourcing of information technology, which is in relatively early stages, will continue over the longer term, driven by pressured IT budgets and increasing complexity around hybrid cloud environments.

© 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.