Research Update: Italian Core Banking Software Provider Cedacri Assigned 'B' Rating; Outlook Negative; Cedacri MergeCo Rating Withdrawn

Cedacri is planning to issue €250 million senior secured notes to fund the purchase of approximately €50 million tax credits and a €150 million shareholder distribution, with the remaining cash to balance sheet for general corporate purposes. We anticipate the additional debt will erode the company's rating headroom and further weigh on its cash flow, partly mitigated by lower cash tax payments in future years due to the tax payment related to this transaction. We assigned our 'B' long-term issuer credit rating to Cedacri SpA following its reverse merger with the parent Cedacri MergeCo SpA in December 2022, and subsequently withdrew our 'B' rating on Cedacri MergeCo. The negative outlook reflects the risk that Cedacri's adjusted debt to EBITDA could

...- Cedacri is planning to issue 250 million senior secured notes to fund the purchase of approximately 50 million tax credits and a 150 million shareholder distribution, with the remaining cash to balance sheet for general corporate purposes. - We anticipate the additional debt will erode the company's rating headroom and further weigh on its cash flow, partly mitigated by lower cash tax payments in future years due to the tax payment related to this transaction. - We assigned our 'B' long-term issuer credit rating to Cedacri SpA following its reverse merger with the parent Cedacri MergeCo SpA in December 2022, and subsequently withdrew our 'B' rating on Cedacri MergeCo. - The negative outlook reflects the risk that Cedacri's adjusted debt to EBITDA could significantly exceed 7x in 2023-2024 if the company's topline growth or synergy realization falls behind plans, or the company increases its debt further in 2023-2024....

Research Update