Project Alpha Intermediate Holding Inc. Rating Lowered To #B-# From #B#; Debt Rating Outlook Stable

Stocks and Financial Services Press Releases Wednesday November 29, 2017 14:22
NEW YORK--29 Nov--S&P Global Ratings

NEW YORK (S&P Global Ratings) Nov. 28, 2017--S&P Global Ratings today said it has lowered its corporate credit rating on Radnor, Pa.-based Project Alpha Intermediate Holding Inc. (Qlik) to 'B-' from 'B'. The outlook is stable.

We also lowered the issue-level rating on the company's $75 million secured revolver due in 2022 and the $995 million secured term loan due in 2024 to 'B-' from 'B'. The recovery rating remains '3', indicating our expectation of meaningful (50%-70%; rounded estimate: 50%) recovery in the event of payment default.

Our ratings reflect Qlik's higher than anticipated adjusted leverage for the period ended Sept. 30, 2017; low EBITDA margins (excluding credit for cost cuts and restructuring) and modest scale relative to software peers; and technological leadership among data analytics enterprise software providers including IBM Corp., Microsoft Corp., SAP SE, Tableau Software, and TIBCO Software Inc.

The stable outlook reflects our expectation that Qlik will maintain adjusted leverage in the high-8x area over the next 12 months, with prospects for deleveraging subsequent to 2018.

We could lower the rating if Qlik's operating performance deteriorates following the implemented cost-cutting initiatives, the company undertakes debt-funded acquisitions or shareholder returns such that the capital structure becomes unsustainable, or FOCF becomes negative.

An upgrade over the next year is unlikely given the high adjusted leverage. Longer term, we could raise the rating if Qlik sustains adjusted leverage below 7x and FOCF flow to debt above 5%, with a commitment from management to stay at or improve those levels.

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