South Jordan, Utah-based LANDesk is paying out $200 million in a dividend recap to its owner Thoma Bravo, according to Moody’s Investors Service. The payout is the second owner’s distribution in the past six months, said Moody’s. LANDesk is currently in the market with more than $500 million in loans that will be used to fund the dividend, according to Thomson Reuters Loan Pricing Corp.
LANDesk, which makes management software, paid a distribution over the summer, although it’s unclear how much it issued. Moody’s estimates that LANDesk’s owners will have taken out nearly 3x their initial investment after the second payout.The company’s pro-forma leverage after the second distribution will exceed 6x, while including expenses, leverage will hit about 7x.
The dividend caused Moody’s to revise its outlook to negative from stable, while it affirmed LANDesk’s ‘B2’ corporate rating and revised the company’s probability of default to ‘B2-PD’ from ‘B3-PD.’
“The ratings outlook is negative reflecting the limited flexibility the company has in the rating category given their very high leverage, aggressive financial policies and acquisition appetite,” Moody’s said in a Feb. 14 statement. “The ratings could be downgraded if performance deteriorates or if leverage is not on track to get below 6x over the near term. Ratings could be upgraded if leverage is sustained below 4x. Given the aggressive financial policies of the owners an upgrade is unlikely in the near to medium term.”
Thoma Bravo, which has offices in Chicago and San Francisco, invests across multiple sectors but focuses on application and infrastructure software, as well as technology-enabled services. The firm typically invests at least $50 million to as much as $300 million or more per deal, according to its website.
News of LANDesk’s second payout comes as Thoma Bravo is out fundraising for its flagship Fund XI, which is targeting $2.5 billion, peHUB reported in January. Thoma Bravo’s prior pool collected $1.25 billion, and was generating a 14.64 percent internal rate of return (IRR) as of March 31, 2013, according to performance information from the California State Teachers’ Retirement System.
The firm appears to be in harvest mode as it looks to exit some of its holdings, including LANDesk.
In December, Reuters reported that the firm had put up for sale Hyland Software and LANDesk. That was followed by a January report that the firm was also exploring the sale of Blue Coat Systems, which could fetch $2 billion or more.
First round bids were expected for LANDesk earlier this month. The company, which had around $80 million in EBITDA, could sell for up to 10x EBITDA, Reuters wrote.
Officials for Thoma Bravo and LANDesk did not return calls or messages for comment.
Luisa Beltran is a senior reporter for peHUB