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S&P gives Micro Holding facilities B, CCC+
S&P said it affirmed its ratings, including the B corporate credit rating, on Micro Holding Corp. (operating as Internet Brands, Inc.) and assigned its B issue-level rating and 3 recovery rating to the company's proposed $150 million incremental revolving credit facility due 2022. The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 65%) of principal in the event of a payment default.
The outlook is stable.
The agency also assigned its CCC+ issue-level rating and 6 recovery rating to the company's $650 million senior secured second-lien term loan due 2025. The 6 recovery rating indicates our expectation for negligible recovery (0%-10%; rounded estimate: 0%) of principal for debtholders in the event of a payment default.
S&P said it expects to withdraw its ratings on the existing senior secured second-lien term loan once it has been repaid.
“Our stable outlook on Internet Brands reflects our expectations for a successful integration of WebMD, continued topline growth in the mid-single-digit percentage area and continued strong cash flow generation Metrics,” S&P said in a news release.
The agency said the stable rating outlook reflects an expectation that Internet Brands will successfully integrate WebMD to fully realize its expected synergies while generating strong, mid- to high-single-digit percentage, organic growth in its health and legal segments and strong cash flow. It also expects pro forma leverage to increase above 7x upon transaction's closing and FOCF to debt in excess of 5%, which, coupled with the company's growth profile, should reduce leverage to below 6.5x over the next 18-24 months.
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