Blackstone to get its money back on Accuvant after just a year

Denver-based Accuvant, a provider of cybersecurity software and services, is in the market with $195 million in add-on term loans that it will use to fund a dividend to shareholders, according to Thomson Reuters Loan Pricing Corp. Jefferies is leading the deal, LPC said.

Blackstone purchased Accuvant in April 2014 in a deal valued at $225 million and owns about 80 percent of the company, according to Reuters. Blackstone’s equity portion was worth $150 million, the New York Times reported.

While Blackstone will benefit from the dividend, Moody’s Investors Service said it creates a “significant” increase in Accuvent’s debt, and it downgraded the company’s corporate family rating to B3 from B2. “B” ratings are considered speculative and are subject to high credit risk, Moody’s said. B2 is more speculative than B1, while B3 is the most speculative, Moody’s said.

“The proposed shareholder distribution effectively takes out all the equity invested in the company,” Moody’s said in a note on May 10.

Accuvant’s leverage will be just under 8x based on March 2015 results, Moody’s said. The ratings agency said leverage over 6x is considered exceptionally high for a low-margin value-added-reseller. Accuvant produced about $1.5 billion in 2014 revenue, according to Moody’s.

In February, Accuvant closed its buy of FishNet Security, which was owned by Investcorp. Financial terms weren’t announced, but Blackstone maintained a majority of the combined company. Investcorp, Sverica International and management hold a minority position.

Blackstone’s investment in Accuvant came from Blackstone Capital Partner VI LP, which raised $15.2 billion. Blackstone last week secured a $17 billion first close for its seventh global private equity fund,Reuters reported. The hard cap for Fund VII is $17.5 billion, Reuters said.

Blackstone Capital Partners VI LP produced a 19.4 percent net IRR and 1.3x investment multiple as of Sept. 30, according to the California Public Employees’ Retirement System.

Blackstone declined comment. Accuvant and Investcorp couldn’t immediately be reached for comment.