Moody’s rates RPX, facilities B3

Moody's Investors Service said it assigned a B3 corporate family rating and Caa1-PD probability of default rating to Riptide Purchaser, Inc. (RPX Corp.) in connection with private equity firm HGGC LLC's proposed acquisition of RPX.

Riptide Purchaser will be merged with and into RPX, with RPX surviving the merger as a wholly owned subsidiary of Riptide Parent, LLC.

At the same time, Moody's assigned B3 ratings to the company's proposed $20 million revolving credit facility due 2023 and $240 million first-lien term loan due 2024.

The outlook is stable.

"Despite RPX's unique value proposition as a provider of patent litigation risk management services and a low expected closing debt leverage, estimated at around 2.5 times (Moody's adjusted), we view the RPX business risk profile as high. Its small scale, expectation for meaningful revenue and EBITDA deterioration over the next 12-18 months driven by the reset of existing contracts to new price levels, highly capital intensive business model (inclusive of net patent spend) and uncertainty about RPX's ability to upsell new services to its installed client base is a major constraint on the company's rating," Moody's assistant vice president, analyst Oleg Markin said in a news release.

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