Research Update: Cardinal Parent Inc.(d/b/a Zywave) Downgraded To 'CCC+' On Negative Cash Flow And Low Liquidity; Outlook Stable

Significant business investments and interest rate headwinds over fiscal 2022 have weakened Cardinal Parent Inc.'s (d/b/a Zywave) credit profile and resulted in financial underperformance and liquidity concerns. While we forecast good revenue growth and margin expansion in fiscal 2023, low liquidity balances may require Zywave to receive external support from its sponsor due to a continued cash burn anticipated in the year. As a result, we have lowered our rating on Zywave from 'B-' to 'CCC+' with a stable outlook. At the same time, we lowered our issue-level ratings on the company's first- and second-lien senior secured instruments to 'CCC+' and 'CCC-', respectively. The stable outlook reflects our view that a debt restructuring or distressed exchange is unlikely to occur

...- Significant business investments and interest rate headwinds over fiscal 2022 have weakened Cardinal Parent Inc.'s (d/b/a Zywave) credit profile and resulted in financial underperformance and liquidity concerns. - While we forecast good revenue growth and margin expansion in fiscal 2023, low liquidity balances may require Zywave to receive external support from its sponsor due to a continued cash burn anticipated in the year. - As a result, we have lowered our rating on Zywave from 'B-' to '###+' with a stable outlook. At the same time, we lowered our issue-level ratings on the company's first- and second-lien senior secured instruments to '###+' and '###-', respectively. - The stable outlook reflects our view that a debt restructuring or distressed exchange is unlikely to occur within the next 12 months given private equity investor Clearlake Capital's written commitment to continue supporting Zywave as needed....

Research Update