TeamViewer (TigerLuxOne) First-Lien Facilities Upgraded To 'B+'; Recovery Rating Revised Upward To '2' Following Review

FRANKFURT (S&P Global Ratings) Feb. 4, 2019--S&P Global Ratings today raised 
to 'B+' from 'B' its issue rating on the first-lien facilities issued by 
TeamViewer (TigerLuxOne). At the same time, we revised up to '2' from '3' the 
recovery rating on the first-lien facilities.

We reviewed the recovery rating in line with two publications: 
  • The guidance document "Guidance: Recovery Rating Criteria For Speculative-Grade Corporate Issuers" that we updated on June 4, 2018. It is related to "Recovery Rating Criteria For Speculative-Grade Corporate Issuers"; and
  • The article titled "Recovery Expectations For Certain Speculative-Grade Corporate Issuers Updated Following Review Of The Largest Issuers," that we published on July 27, 2018.
TigerLuxOne's first-lien facilities consist of a $35 million revolving credit 
facility (RCF) and $325 million and €226 million term loans due 2024. Our 
revised recovery rating of '2' indicates our expectation of meaningful 
recovery prospects (70%-90%, rounded estimate: 75%) in the event of a 
hypothetical default. 

The revision of our estimated recovery prospects reflects our most recent 
benchmarking of TeamViewer's business against other peers in the software 
industry and the progress it is making in moving from license- to 
subscription-based revenues, which we consider are recurring and 
more-predictable. In addition, our assessment also acknowledges the material 
portion of second-lien debt in the capital structure (about 25% of third-party 
debt), which acts as a cushion for first-lien creditors. These considerations 
induced us to revise the valuation multiple to 6.5x from 6.0x, as well as 
removing the negative operational adjustment.

Our updated guidance document is intended to be read in conjunction with the 
criteria article, which was published on Dec. 7, 2016. It provides additional 
information and guidance related to the use of adjustments in the application 
of the related criteria.

We updated the guidance document after our analysis of an empirical recovery 
study published on May 1, 2018, and our subsequent sector reviews (see "
Leveraged Finance: 2017 Annual Study Of Corporate Recoveries In Europe: A 
Moderation From Postcrisis Highs"). The May 1 study, which showed consistently 
strong recovery levels over the period covered, demonstrated to us that it is 
appropriate to make greater use of the analytical adjustments described in the 
recovery rating criteria when assigning recovery ratings to first-lien debt 
instruments in specific circumstances. The guidance document provides more 
details about the circumstances under which these adjustments might apply. Our 
application of the recovery rating criteria will continue to factor in 
evolutions in the empirical data and trends that we may observe in the 
leveraged market over time.

SIMULATED DEFAULT ASSUMPTIONS
  • Simulated year of default: 2022
  • Minimum capex at 1% of historical three-year annual average revenues, based on historically low minimum capex requirement.
  • Cyclicality adjustment factor: +5% (standard assumption for the technology software and services sector)
  • Operational adjustment: 0%
  • Cash EBITDA at emergence: about €66 million
  • Implied enterprise value (EV) multiple: 6.5x
  • Jurisdiction: Germany
SIMPLIFIED WATERFALL
  • Gross recovery value: about €426 million
  • Net value available to creditors after admin expenses (5%): €404 million
  • Estimated first-lien debt claims: €531 million*
  • Recovery range: 70%-90% (rounded estimate 75%)
  • Recovery rating: 2
  • Value available for second-lien senior secured claims: zero
  • Estimated second-lien senior secured debt claims: €184 million*
  • --Recovery expectations: 0%-10% (rounded estimate: 0%)
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*All debt amounts include six months of prepetition interest. We assume that 
the RCF is 85% drawn at default.