Fitch revises Open Text outlook to stable

Fitch Ratings said it changed its outlook for Open Text Corp. (OTEX) and its subsidiaries, Open Text Holdings, Inc. and Open Text ULC to stable from negative.

“Fitch has revised the outlook to stable from negative, which reflects the company's planned divestiture of its application modernization and connectivity (AMC) assets for $2.275 billion, or $2 billion net of transaction costs and related taxes. Open Text has publicly stated that it will direct 100% of net proceeds within 90 days of closing toward debt repayment, which the company expects to occur in 4QFY24. Fitch now projects leverage to fall to just over 3.1x at the end of FY24 assuming $2 billion of debt is repaid before the closing of the fiscal year,” the agency said in a press release.

The agency concurrently affirmed OTEX’s BB+ long-term issuer default rating. The subsidiaries and OTEX are co-borrowers on the secured revolver.

Additionally, Fitch said it affirmed the BBB-/RR1 ratings on the senior secured debt and the BB+/RR4 ratings on the senior unsecured debt of OTEX and the BB+/RR4 ratings on Open Text Holdings' senior unsecured debt. Finally, it affirmed the BBB-/RR1 rating on OTEX’s secured term loan.

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