S&P: LANDesk loans B-, CCC+

S&P said it assigned a B- corporate credit rating to LANDesk Holdings Inc.

The outlook remains stable.

The agency also said it assigned B- ratings with recovery ratings of 3 to the company's proposed $75 million secured revolving credit facility and $800 million secured first-lien term loan. The 3 recovery rating indicates 50% to 70% expected default recovery.

S&P also said it assigned a CCC+ rating with recovery rating of 5 to the company's proposed $225 million secured second-lien term loan. The 5 recovery rating indicates 10% to 30% expected default recovery.

The agency also said it will withdraw ratings on LANDesk's previous holding company, Landslide Holdings Inc., and on its debt once this deal closes.

Clearlake Capital is acquiring LANDesk Software Inc. and merging it with Heat Software. The holding company is LANDesk Holdings.

The ratings reflect LANDesk's current adjusted leverage in the high-8x range, along with a projection that adjusted leverage will drop to the mid-7x range over the next 12 months as acquisition-related synergies roll in and one-time transaction-related expenses and integration costs roll off, S&P explained.

The combined company is expected to generate modest organic top-line growth, the agency added.

Key risks include significant add-backs to EBITDA for both legacy LANDesk and HEAT Software, HEAT Software's limited operating history at its current scale and potential disruption associated with the cost synergies, S&P said.

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