Moody's gives OceanKey B2

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to OceanKey (U.S.) II Corp. (Mediaocean) following the acquisition by private equity firms CVC Capital Partners and TA Associates. Concurrently, Moody's assigned a B2 rating to Mediaocean's first-lien bank credit facility consisting of a $875 million term loan and a $75 million revolver.

“Mediaocean's B2 CFR reflects the company's high leverage of around 7x debt/EBITDA (pro forma for the transaction and the acquisition of Flashtalking), small scale, customer concentration among top advertising agencies and an acquisitive growth strategy. The company's narrow focus on software solutions for the advertising industry exposes it to the cyclical advertising market, which has been vulnerable to economic downturns,” Moody’s said in a press release.

The proceeds from the first-lien term loan, an unrated $125 million senior secured second-lien term loan and cash equity will be used to buy the company from private equity firm Vista Equity Partners. The CFR, PDR and debt instruments for the company under Vista Equity Partners ownership will be withdrawn at the deal’s close.

The outlook is stable. The outlook reflects an expectation for mid-to-high single digit organic revenue and EBITDA growth over the next 12 to 18 months, driven by growing global ad spend and ongoing transition toward digital advertising solutions. “Moody's expects leverage will decrease to 6.5x over the next 12 to 18 months.”

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