Research: Rating Action: Moody’s Downgrades CareerBuilder’s CFR and Senior Secured Rating from Caa3 to Caa1 as Debt Maturity Approaches; stable outlook

New York, September 20, 2022 — Moody’s Investors Service (“Moody’s”) has downgraded the Corporate Family Rating (“CFR”) of CareerBuilder, LLC (“CareerBuilder”) to Caa3 from Caa1, the Probability Rating of Default (“PDR”) at Ca -PD of Caa1-PD, and Senior Secured Term Loan Rating at Caa3 of Caa1. The outlook changed from negative to stable.

The downgrading of CareerBuilder’s CFR to Caa3 reflects Moody’s view that the likelihood of a debt restructuring has increased given the July 2023 maturity of its senior secured term loan and market trends. operating negatives that include declining revenues, negative free cash flow and lack of consolidated earnings. Moody’s views the capital structure as unsustainable, particularly given the limited time the company has to complete an asset sale and/or refinancing. The downgrade of PDR to Ca-PD from Caa1-PD specifically incorporates Moody’s view of a high probability of a distressed exchange – preemptive or otherwise – with above average recovery in the event of default.

Downgrades:

..Issuer: CareerBuilder, LLC

…. Corporate family ranking, downgraded to Caa3 from Caa1

…. Default scoring probability, downgraded to Ca-PD from Caa1-PD

…. Senior Secured Senior Term Loan, downgraded to Caa3 (LGD3) from Caa1 (LGD3)

Outlook Actions:

..Issuer: CareerBuilder, LLC

…. Outlook, changed to stable from negative

RATINGS RATIONALE

CareerBuilder’s Caa3 CFR reflects its high distressed exchange risk given the $175.6 million senior secured term loan outstanding in July 2023 and the company’s weak credit metrics which include a decline 7.5% of revenue in the last twelve months ending June 30, 2022. Earnings quality is very low and characterized by negative EBITDA without including significant add-ons for restructuring charges and other items. After investing heavily in marketing and its go-to-market strategy over the past two years, the company has slowed the decline in revenue, but has yet to demonstrate a consistent growth profile that would lead to improved earnings. sufficient to effectively cover its current indebtedness, or which would allow refinancing under good economic conditions. With $52.1 million in cash on hand, the company has enough cash to operate through its July 2023 deadline, but Moody’s expects it to experience free cash flow shortfalls of approximately $45 million on an annual basis under the current capital structure. CareerBuilder benefits from a well-known brand and a large resume database. However, there the company faces stiff competition, especially from larger, better-capitalized peers such as Indeed.com owner Recruit Holdings Co., Ltd. (A3 stable) and the owner of LinkedIn Microsoft Corporation (Aaa stable).

All quoted financial measures reflect Moody’s standard adjustments.

Moody’s expects CareerBuilder’s financial strategies to be aggressive in its private equity and could include cash distributions to shareholders. The company used the proceeds from the sale of assets in 2020 for debt reduction, cash to fund future investments and distribution to shareholders and may potentially consider divesting other assets in anticipation of the maturity of its debt in July 2023. Moody’s notes that the losses and cash burn are partly the result of the company’s decision to invest proceeds from the sale of assets in the business. Nevertheless, the continued decline in revenues, even if it is slowing down, is also a key factor in the poor operating results.

CareerBuilder’s liquidity profile is considered weak. The company will rely on its large cash balance to fund its operations. Cash as of June 30, 2022 was $52.1 million. The $50 million revolving credit facility is no longer available after expiring in July 2022. Moody’s expects the company to generate negative free cash flow of $45 million on an annual basis through the July 2023 maturity of its senior secured term loan. There are no financial covenants on the senior credit facility after the expiration of the revolver.

The Caa3 $175 million senior secured term loan maturing July 2023 reflects both the PDR of Ca-PD and the loss-given-default (“LGD”) valuation of LGD3. The Senior Secured Senior Term Loan benefits from secured guarantees from all existing and subsequently acquired National Subsidiaries and is CFR Caa3 compliant as there is no other significant debt in the capital structure .

The stable outlook reflects Moody’s view that the company’s probability of default, including the potential for debt restructuring, will remain at current levels as it executes on its plan to meet upcoming maturities of the debt.

FACTORS THAT MAY LEAD TO IMPROVEMENT OR DEGRADATION OF RATINGS

Ratings could be improved if the company addresses its debt maturity and reduces its leverage.

The ratings could be downgraded if the company’s liquidity were to erode faster than Moody’s expected, so the likelihood of a default became more imminent or if the company were to undertake a distressed debt swap.

The main methodology used in these ratings is that of business and consumer services published in November 2021 and available on https://ratings.moodys.com/api/rmc-documents/356424. Otherwise, please see the Scoring Methodologies page on https://ratings.moodys.com for a copy of this methodology.

CareerBuilder, headquartered in Chicago, IL and controlled by subsidiaries of private equity sponsor Apollo Global Management, operates an online job site and provides related services and software. Revenue for the twelve months ending June 30, 2022 was $242 million.

REGULATORY INFORMATION

For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at https://ratings.moodys.com.

For all relevant securities or rated entities receiving direct credit support from the lead entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action , the associated regulatory information will be that of the guarantor entity. Exceptions to this approach exist for the following information, if applicable to the jurisdiction: Ancillary services, Information to be provided to the rated entity, Information to be provided by the rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued without modification as a result of such disclosure.

These notes are solicited. Please refer to Moody’s Policy for the Designation and Assignment of Unsolicited Credit Ratings available on its website. https://ratings.moodys.com.

The regulatory information contained in this press release applies to the credit rating and, if applicable, the outlook or rating revision relating thereto.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis are available at https://ratings.moodys.com/documents/PBC_1288235.

The worldwide credit rating on this credit rating announcement was issued by one of Moody’s affiliates outside the EU and is approved by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main. -le-Main 60322, Germany, in accordance with Article 4(3) of Regulation (EC) No 1060/2009 on credit rating agencies. Further information on the EU approval status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the UK and is approved by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the United Kingdom. . Further information on the UK endorsement status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and Moody’s legal entity that issued the rating.

Please see the issuer/transaction page at https://ratings.moodys.com for additional regulatory information for each credit rating.

Andre MacDonald
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Andrea Usai
Associate General Manager
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Release Office:
Moody’s Investors Service, Inc.
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UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

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