S&P rates OceanKey, loans B

S&P said it gave OceanKey (U.S.) II Corp. (Mediaocean) and its planned first-lien credit facilities B ratings.

“Our B issuer credit rating on OceanKey reflects the company's leading position as a provider of advertising technology to advertising agencies, its growing exposure to brand advertisers, digital advertising capabilities, consistent above-average profitability, and good cash flow conversion. These factors are somewhat offset by the substantial debt burden under the proposed refinancing, its significant client concentration, modest scale, niche solutions offering, limited pricing power under its largest contracts, and its exposure to a fragmented and competitive digital advertising industry,” the agency said in a press release.

Mediaocean will use the proceeds to refinance its capital structure to support a leveraged buyout by its new financial sponsors, CVC Capital Partners and TA Associates. The capital structure will consist of an undrawn at close $75 million first-lien revolver, an $875 million first-lien term loan, and an unrated $125 million second-lien term loan.

The outlook is stable. “Despite the incremental interest expense under the new capital structure, we still expect substantial positive FOCF, with FOCF to debt in the 7% area in 2021 and 2022 due to low capital expenditure and working capital requirements,” S&P said.

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