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13 Aug 2010
Approximately $400 million of debt rated
New York, August 13, 2010 -- Moody's Investors Service assigned to EVERTEC, Inc. a first-time
Corporate Family Rating (CFR) of B2 and Probability of Default Rating
of B2. Concurrently, Moody's assigned a Ba3 rating to EVERTEC's
proposed $50 million senior secured revolving credit facility and
$350 million senior secured term loan. The rating outlook
EVERTEC is the payment processing and merchant acquiring subsidiary of
Popular, Inc. (the parent company of Banco Popular de Puerto
Rico, the largest bank in Puerto Rico). On July 1,
2010, private equity firm, Apollo Management VII, L.P.
(Apollo) signed an agreement to acquire 51% in EVERTEC.
Popular, Inc. will retain 49% ownership interest.
The ratings were assigned in connection with EVERTEC's proposed debt issuance,
which will be used to finance a portion of the transaction. The
assigned ratings are subject to review of final documentation and no material
change in the terms and conditions of the transaction as advised to Moody's.
EVERTEC's B2 CFR reflects the company's high financial leverage,
concentrated business profile, and small scale relative to larger
and financially stronger transaction processors outside of Puerto Rico.
The company is heavily reliant on Popular, Inc. and Puerto
Rico's economy, which has remained in a prolonged recession
since March 2006. While there have been some signs of economic
stabilization, the commonwealth remains mired with high unemployment,
low workforce participation, and high poverty levels as compared
to the U.S.
At the same time, the B2 rating reflects the company's leading
position in the electronic payment processing and merchant acquiring businesses
in Puerto Rico, highly-scaleable ATH network platform,
and a 15 year services agreement with Banco Popular whereby EVERTEC will
serve as the exclusive transaction processor for the bank. The
company's stable and recurring transaction-based revenue
stream and solid free cash flow is also supported by multi-year
contracts with merchants. The rating also considers the generally
favorable macro environment for electronic payment processing industry
as the secular shift from cash/checks to electronic payments continues
as well as the potential for further growth in Latin America due to the
company's scalable processing network.
The stable outlook is supported by our expectation that EVERTEC will generate
low single digit revenue growth and steady cash flow over the next year
and a half even if the economy in Puerto Rico remains stagnant due its
entrenched position as the commonwealth's leading payment processor.
The following first-time ratings/assessments were assigned:
Corporate Family Rating -- B2
Probability of Default Rating -- B2
$50 million Senior Secured Revolving Credit Facility -- Ba3
$350 million Senior Secured Term Loan B -- Ba3 (LGD-3,
The principal methodology used in rating EVERTEC was Moody's Global Business
and Consumer Service Industry, published in August 2007 and available
on www.moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors
that may have been considered in the process of rating this issuer can
also be found in the Rating Methodologies sub-directory on Moody's
Moody's subscribers can find additional information in the EVERTEC Credit
Opinion published on www.moodys.com.
Based in San Juan, Puerto Rico, EVERTEC, Inc.,
with about $287 million of revenue for the twelve months ended
June 30, 2010, is a provider of credit and debit card-based
payment processing services for merchants in Latin America, as well
as community banks, financial institutions and municipal governments.
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's assigns first-time B2 CFR to EVERTEC, Inc.; outlook stable
250 Greenwich Street
New York, NY 10007
No Related Data.
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