S&P cuts Verifone, rates facilities B, B-

S&P said it lowered its issuer credit rating on Verifone Systems Inc. to B from BB. The outlook is stable.

At the same time, the agency assigned its B issue-level rating and 3 recovery rating to the company's planned first-lien credit facility, comprising a $250 million revolving credit facility due 2023 and $1.65 billion term loan due 2025.

The 3 recovery rating reflects an expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default.

The agency also assigned its B- issue-level rating and 5 recovery rating to the company's planned $300 million second-lien credit facility due 2026. The 5 recovery rating reflects an expectation of modest (10%-30%; rounded estimate: 20%) recovery in the event of a payment default.

Verifone Systems is expected to close its leveraged buyout by Francisco Partners Management LLC in the third quarter of 2018.

S&P said it will withdraw the BB issue-level rating and 3 recovery rating on Verifone Inc.'s existing first-lien credit facility, as well as the issuer credit rating, at transaction close.

“Our downgrade reflects the substantially increased debt to fund the leveraged buyout (LBO) resulting in initial leverage in the mid-7x debt to EBITDA, excluding the company's cost-cut considerations over the next several years, from the low-3x area as of April 30, 2018,” the agency said in a news release.

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