S&P cuts Virtusa loan, rates loan B

S&P said it rated Austin Holdco Inc.’s (Virtusa) incremental first-lien term loan B and lowered its outstanding first-lien debt to B from B+. The agency also revised the recovery rating to 3 from 2. The lower recovery rating reflects the increased first-lien debt in the capital structure.

Virtusa plans to use the proceeds to fund a dividend.

We expect Virtusa's free cash flow to debt metrics to weaken because of the increase in its debt, though we expect its metrics to improve steadily into its next fiscal year as it continues to expand. For fiscal year 2022, we forecast the company will generate about $50 million (4% of debt) of free cash flow before improving to the $90 million-$100 million range (representing a mid-to-high single digit percent of its debt) in fiscal year 2023.

Concurrently, S&P affirmed Virtusa’s B issuer rating and the CCC+ issue and 6 recovery ratings on its unsecured notes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.