Moody's rates Reynolds and Reynolds loans Ba2, B3

Moody's Investors Service said it assigned B1 corporate family and probability-of-default ratings to The Reynolds and Reynolds Co., Ba2 ratings to its $1.485 billion six-year first-lien term loan (LGD-2, 29%) and $70 million six-year first- lien revolving credit facility (LGD-2, 29%) and B3 ratings to its $520 million seven-year second-lien term loan (LGD-5, 77%) and $405 million seven-and-a-half-year third-lien term loan (LGD-6, 91%).

The outlook is stable.

The net proceeds of the current offering, along with $331 million balance sheet cash, $250 million preferred equity and $102 million of Brockman trust (Spanish Steps) common equity, will be applied to the $2.7 billion purchase of Reynolds' common equity by Universal Computer Services, Inc., $379 million repayment of combined Reynolds and Universal Computer bank debt, $50 million Reynolds cash balance and $85 million transaction fees and expenses.

A stockholder meeting of has been scheduled for Oct. 23 to vote on the company's proposed merger, which is expected to close on Oct. 26. Subsequent to closing of the planned merger, the former Reynolds' Ba1 corporate family rating and Ba1 medium-term note program rating will be withdrawn, given the likelihood that following the potential merger, Reynolds will have no more debt.

Moody's said the ratings reflect Reynolds' high financial leverage and modest interest coverage associated with the company's proposed merger, mitigated by the company's market-leading position as a provider of dealership management software and significant recurring maintenance revenue stream.

© 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.