S&P rates MIH add-on B, view dropped to stable

Standard & Poor's said it revised the outlook on MIH Parent Inc. to stable from positive and affirmed its B- corporate credit rating.

The agency also said it assigned a B rating with a recovery rating of 2 to the proposed $125 million incremental first-lien term loan.

The recovery rating of 2 indicates 70% to 90% expected default recovery.

S&P also said it affirmed the B rating with a recovery rating of 2 on the company's existing $50 million revolving credit facility and $490 million first-lien term loan.

The agency also affirmed the CCC rating with a 6 recovery rating on the company's $245 million senior secured second-lien term loan. The 6 recovery rating indicates 0% to 10% expected default recovery.

The outlook revision is based on an expectation that the company's leverage will fall only to about 8x over the next year, instead of the mid-7x range, due to the additional debt associated with the pending Fairpay acquisition, said Katarzyna Nolan, an S&P analyst.

The ratings reflect the company's weak business profile, characterized by its fairly narrow addressable market and relatively small revenue base, Nolan said in a press release.

The company's solid market position, highly visible revenue base and modest positive free cash flow partially offset these factors, Nolan said.

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