S&P rates Yahoo B-

S&P said it assigned B- ratings to Yahoo (College Parent LP) and its subsidiary AP Core Holdings II LLC.

Concurrently, the agency gave B issue-level and 2 recovery ratings to AP Core's proposed senior secured debt, which will include a $750 million senior secured term loan B-1, a $750 million senior secured term loan B-2 and a $150 million senior secured revolving credit facility to help fund the acquisition of College Parent by Apollo Global Management Inc.

The company is also issuing $500 million in senior unsecured notes and an undrawn $850 million senior delayed-draw term loan, both unrated and not backed by the collateral at AP Core, along with preferred equity of about $3.3 billion to support the deal.

“Our B- issuer credit rating on College Parent reflects operations in the intensely competitive internet market against peers with more resources and greater market share, ongoing changes to data privacy and technology that could affect competitiveness, elevated leverage, and weak FOCF. The company's well-known brand and solid presence in the digital search and display advertising market somewhat temper these weaknesses,” the agency said in a press release.

The outlook is stable. “The stable outlook reflects our expectation for College Parent to maintain free operating cash flow (FOCF) to debt of less than 5% and adjusted leverage of about 16x in 2021, inclusive of $3.3 billion of preferred equity in adjusted debt. We expect low-single-digit percentage revenue growth over the next 12 months,” S&P said.

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