December 10, 2012 / 8:38 PM / 5 years ago

TEXT - S&P comments on Group

Dec 10 - Standard & Poor’s Ratings Services said today that its ratings on Jacksonville, Fla.-based Group Inc.’s are unchanged after the company’s recent repricing of its first-lien facility and revolving credit facility. The company used proceeds to repay in full the existing term loan B due 2017 and $60 million of the second-lien term loan due 2018. Debt leverage will remain at roughly 6.0x pro forma for the transaction. The transaction will reduce annual interest expense by approximately $11 million and improve discretionary cash flow generation.

Our rating on reflects the company’s “weak” business risk profile and “highly leveraged” financial risk profile, according to our criteria. Our business risk assessment is based on tough competition among Web services providers for small and midsize business spending. Our financial risk assessment is based on’s high lease-adjusted debt-to-EBITDA pro forma for the transaction in the low-6x area on a GAAP basis, consistent with the indicative ratio of 5x or greater we associate with a highly leveraged financial risk profile. Our governance assessment is “fair.” We expect leverage to drop below 6x over the coming year, fueled by EBITDA growth and increased discretionary cash flow, used at least in part for debt repayment.

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