S&P upgrades Paysafe to ‘B+’ on significant debt repayment
S&P Global Ratings today took a rating action regarding Paysafe Group Holdings II Ltd. (Paysafe) as the latter has used new equity to reduce its debt, thereby improving its future credit metrics.
Paysafe raised about $3.6 billion of new equity from a public listing on the New York Stock Exchange through a merger with special-purpose acquisition company Foley Trasimene Acquisition Corp. II.
Paysafe has used about $1.1 billion of the $3.6 billion to repay $617 million of first-lien term loans and redeem the entire $500 million of second-lien debt. Due to this, S&P expects Paysafe’s S&P Global Ratings-adjusted debt to EBITDA to fall to about 5.0x in 2021 from about 9.0x in 2020. The lower debt balance will also reduce Paysafe’s interest costs by about $70 million on a pro forma basis and contribute to higher free cash flow generation.
Notwithstanding the debt repayment and our expectation of a solid recovery in profitability, S&P still expects Paysafe to remain highly leveraged in 2021. The rating agency expects that the company will reduce its adjusted debt to EBITDA below 5x in 2022.
Let’s recall that on March 30, 2021, Paysafe Group Holdings Limited and Foley Trasimene Acquisition Corp. II, a special purpose acquisition company, announced that they have completed their previously announced merger. The combined company now operates as Paysafe Limited.
Paysafe is a leading specialized payments platform, with a two-sided consumer and merchant network, whose core purpose is to enable businesses and consumers around the world to connect and transact seamlessly through payment processing; digital wallets including the Skrill and Neteller brands; and online cash solutions including paysafecard and Paysafecash.
William P. Foley, II, Founder and Chairman of Foley Trasimene will serve as Chairman of Paysafe’s newly formed Board of Directors. Paysafe’s management team headed up by Philip McHugh, CEO, will continue to lead the combined company.