S&P rates Overdrive B, ups loan

S&P said it assigned Overdrive (Aragorn Holding Parent Corp.) and raised the issue-level rating on the first-lien term loan facility to B. The 3 recovery rating is unchanged.

Aragorn Parent Corp., a wholly-owned subsidiary of Aragorn Holding Parent and Recorded Books Inc. (doing business as RB Media), a wholly-owned subsidiary of Recorded Books Holdings Inc., were co-borrowers on the senior secured first-lien credit facilities. In August, KKR sold RB Media to HIG Capital. The term loan remains under Aragorn Parent.

Due to the sale, S&P said it withdrew its B- issuer rating on Recorded Books Holdings and assigned an issuer rating to Aragorn Holding Parent.

“The digital books market is evolving and growing at a healthy rate, with several large players including Amazon.com Inc. (AA/stable/A-1+) and Apple Inc. (AA+/stable/A-1+). OverDrive, as a leading distributor of e-books, audiobooks, and other digital content to public libraries, is also benefitting from the growth of digital consumption as libraries and schools allocate more resources to digital budgets to keep up with the increase in demand from library patrons and students. OverDrive is well represented in the market, with distribution in approximately 90% of U.S. public libraries through its app, Libby,” S&P said in a press release.

S&P said it estimates S&P Global Ratings-adjusted leverage of high-5x at the end of 2023, declining to low-5x by December 2024.

The outlook is stable.

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