Research Update: Confluence Technologies Inc. Assigned 'CCC+' Rating On Continued Cash Flow Deficits; Outlook Negative

Investment management software and solutions provider Confluence Technologies Inc. continues to underperform S&P Global Ratings' forecast primarily due to prolonged acquisition integration costs, heightened interest expense, and higher operating costs. We forecast the company will burn cash in 2024 and 2025, requiring it to borrow on its revolving credit facility to fund operations. We expect EBITDA interest coverage will remain weak and leverage will be in the mid-teens. We assigned our 'CCC+' issuer credit rating (ICR) to Confluence, reflecting our view that its capital structure is unsustainable. We also lowered our ratings on Cobra Holdings Inc. (the previously rated entity) to 'CCC+' from 'B-' and subsequently withdrew them. Confluence Technologies Inc. will now be the rated entity. At the same

...- Investment management software and solutions provider Confluence Technologies Inc. continues to underperform S&P Global Ratings' forecast primarily due to prolonged acquisition integration costs, heightened interest expense, and higher operating costs. We forecast the company will burn cash in 2024 and 2025, requiring it to borrow on its revolving credit facility to fund operations. We expect EBITDA interest coverage will remain weak and leverage will be in the mid-teens. - We assigned our '###+' issuer credit rating (ICR) to Confluence, reflecting our view that its capital structure is unsustainable. We also lowered our ratings on Cobra Holdings Inc. (the previously rated entity) to '###+' from 'B-' and subsequently withdrew them. Confluence Technologies Inc. will now be the rated entity. - At the same time, we lowered our issue-level rating on the company's first-lien credit facilities to '###+' from 'B-' because of the lower ICR. - The negative outlook reflects the possibility we could...

Research Update