S&P assigns B to Mosel Bidco, loan

S&P said it preliminarily assigned B ratings to Mosel Bidco SE and its planned €1 billion term loan. The outlook is stable.

Silver Lake plans to buy Software AG (SAG) through Mosel using the loan, balance sheet cash and equity.

“SAG has a highly leveraged capital structure but sound deleveraging prospects. We forecast that the company's leverage will increase significantly to 7.9x in 2023 from 4x in 2022. This mainly stems from higher debt of €1 billion following the buyout and temporary pressure on EBITDA because of the company's ongoing transition to a subscription-based business model, growth-driven investments in its digital business platform, and high restructuring-related costs,” S&P said in a press release.

However, the agency said it sees SAG improving its adjusted margin to about 20% in 2024, compared with S&P’s forecast of about 14% in 2023. “This should lead to sound deleveraging toward 5x in 2024 and free operating cash flow (FOCF) of more than €60 million.”

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