Skillsoft Lines Up Financing for SumTotal Acquisition

Online e-learning firm Skillsoft Corp. has lined up financing for its acquisition of human resource software and services company SumTotal Systems, according to the firm’s announcement of the deal Friday.

Terms of the acquisition and financing were undisclosed, but Skillsoft stated the financial commitments have been obtained from Barclays, Morgan Stanley, Deutsche Bank and Credit Suisse.

The agreement stated that the Nashua, N.H.-based firm would be buying SumTotal from private equity firm Vista Equity Partners, which will retain a minority ownership stake in the combined firms. Both firms have widely used software, with Skillsoft's installed corporate and government customer base at more than 6,000 and SumTotal's at 3,500. 

Skillsoft was acquired by Charterhouse Capital Partners in a deal totaling more than $2 billion, and in April completed a $1.49 billion offering of first-and second-lien loans to finance the transaction as well as refinance debt. The loans consist of a seven-year, $900 million first-lien tranche and a $485 million second-lien facility maturing in 2022. Also issued was a five-year, $100 million revolver.

Skillsoft’s parent firm established from the buyout, Evergreen Skills Lux S.a r.l., carries a ‘B3’ corporate rating by Moody’s Investors Service, which also carries ‘B1’ first-lien and ‘Caa3’ second-lien debt ratings for the facilities.  Moody’s stated Friday the ratings are not yet impacted since terms of the transaction or any incremental debt have not been disclosed.

Evergreen/Skill soft has a ‘B’ rating from Standard & Poor’s, while India-based parent firm Skillsoft Ltd. is assigned a ‘B-‘ corporate rating from S&P. The existing loans are rated ‘B-’ (first-lien) and ‘CCC’ (second-lien.

S&P rates SumTotal with a ‘B’/stable rating, while Moody’s has assigned the Gainesville, Fla.-based company with a ‘B2’/negative rating. Moody’s stated Friday the transaction would have no impact on existing ratings.  

In December 2012 SumTotal issued $540 million in loans. A $370 million seven-year first-lien loan and a $30 million revolver are rated ‘B+’ by S&P and a $140 million second-lien loan maturing in 2019 is rated ‘CCC+’. Moody’s rates the first-lien loans from SumTotal at ‘B1’ and the second-lien at ‘Caa1’.  

The company's estimated enterprise value in 2012 was $358 million, according to S&P.