S&P Places Pactera Technology (PACT) Ratings on CreditWatch Developing

August 24, 2016 9:15 AM EDT
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S&P Global Ratings said that it had placed its 'B+' long-term corporate credit rating and 'cnBB' long-term Greater China regional scale rating on Pactera Technology International Ltd. (NASDAQ: PACT) on CreditWatch with developing implications.

At the same time, we placed our 'B+' long-term issue rating and 'cnBB' Greater China regional scale rating on the US$275 million senior unsecured notes due 2021 that the company guarantees on CreditWatch with developing implications. BCP (Singapore) VI Cayman Financing Co. Ltd. issued the notes. Pactera is a China-based information technology (IT) outsourcing services provider.

We placed the ratings on Pactera on CreditWatch following a proposal by HNA Group to acquire the company.

Pactera announced on Aug. 22, 2016, that Blackstone Group L.P. and some other shareholders of BCP (Singapore) VI Cayman Acquisition Co. Ltd. have entered into a share purchase agreement with HNA EcoTech Group Co. Ltd., an affiliate of HNA Group, for the sale of almost all the issued and outstanding shares of BCP (Singapore) VI Cayman Acquisition to HNA EcoTech or its affiliates. The agreement was signed on Aug. 8, 2016. BCP (Singapore) VI Cayman Acquisition fully owns BCP (Singapore) VI Cayman Financing, which owns Pactera.

We currently have limited information to assess the impact of the acquisition on Pactera. We expect the acquisition to be complete by mid-2017, subject to the satisfaction of certain closing conditions, including the receipt of all required regulatory approvals.

"We expect Pactera to become a consolidated subsidiary of HNA Group once the transaction is complete," said S&P Global Ratings Leo Hu. "HNA Group or its affiliates will replace Blackstone as the ultimate parent of Pactera, with controlling ownership. We will then assess the creditworthiness of HNA Group, and Pactera's strategic status within the group, while assessing the impact of the transaction on Pactera's credit profile."

HNA Group is a conglomerate with businesses in aviation, property development, leasing, tourism, logistic, IT, and other segments in China and overseas. HNA Group has made a number of sizable international investments funded with both equity and debt in the past several years.

"We are yet to receive complete information from HNA Group to assess the group's business and financial strengths, and its group credit profile, which would drive the rating of Pactera," said Mr. Hu. "We would assess how Pactera can play a strategic role within the group, and the likelihood of it receiving group support."

We aim to resolve the CreditWatch within the next three months.

In resolving the CreditWatch, we will mainly review the creditworthiness of HNA Group, and Pactera's group status within the new combined entity.



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