Moody’s changes EIG outlook to stable

Moody's Investors Service said it affirmed EIG Investors Corp.'s existing ratings, including its B2 corporate family rating, B3-PD probability of default rating, the B2 rating for its first-lien credit facilities and the SGL-2 speculative grade liquidity rating.

The outlook was changed to stable from positive.

Moody's said the outlook change reflects the expected deterioration in credit metrics as a result of the proposed debt-financed acquisition of Constant Contact for about $1.1 billion. EIG expects to close the acquisition in the first quarter of 2016. The acquisition will raise EIG's reported leverage significantly above its intermediate term target range of about 4 times on its reported debt to adjusted EBITDA basis.

If the acquisition closes as proposed, the agency expects EIG's total debt to EBITDA to increase to over 7 times from about 5 times (Moody's adjusted, including deferred acquisition consideration as debt), before the $55 million of targeted cost savings are included.

The company expects to realize the cost synergies on a run-rate basis by the end of the first year after the acquisition. Absent further debt-financed acquisitions, Moody's expects EIG's leverage to decline to about 5 times toward the end of 2017 from organic EBITDA growth and realization of synergies.

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