Moody’s rates Tempo CFR B2, facilities B1, notes Caa1

Moody's Investors Service said it assigned Tempo Acquisition, LLC a B2 corporate family rating, B2-PD probability of default rating, a B1 rating to the $2.7 billion of new first-lien credit facilities and a Caa1 rating to the $730 million of senior unsecured notes.

The outlook is stable.

Proceeds from the debt offerings and about $1.2 billion of equity will be used to finance the acquisition of Tempo by affiliates of Blackstone Group LP from Aon plc. The acquired businesses will consist of benefits administration and business process outsourcing services.

Moody’s said the B2 corporate family rating reflects the company’s high initial leverage, competitive pressures in its businesses, including moderate pricing erosion in some services, and mature demand for the majority of its services.

Tempo's total debt to 2016 EBITDA (Moody's adjusted, deducting capitalized software expenses) will be roughly 7 times when the acquisition closes but Moody's expects leverage to decline to about 6 times by the end of 2018 as the company realizes cost savings after its separation from the parent company.

However, the agency added, execution risk will be elevated while the company transitions into a standalone business over the next 24 months and management implements cost reductions targeting about $64 million of savings in the next 12 months.

© 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.