Moody's lowers Websense, debt

Moody's Investors Service said it downgraded Websense, Inc.'s corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD.

The first-lien debt, which was upsized to fund the distribution, was cut to B1 from Ba3 and the second-lien debt was downgraded to Caa2 from Caa1.

The downgrade was driven by a proposed increase in debt to fund a shareholder distribution. Private equity firm Vista Equity Partners owns Websense.

The outlook is stable.

Moody's said the downgrade reflects the increase in debt while the company is in early stages of restructuring the business. The increase in debt delays its original expectations for deleveraging by a year or more. Leverage is roughly 9x based on preliminary Dec. 31 results (6.7x pro forma for the various restructuring plans underway). Though actual leverage has the potential to get to 6x in 2015, the company has considerable work to do to get there and free cash flow will likely be minimal in 2014. Deleveraging could be further delayed by acquisitions or additional shareholder distributions, the agency added.

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