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S&P revises outlook on Edelman Financial Center

S&P Global Ratings revised its outlook on Edelman Financial Center LLC to negative from stable, and affirmed its B issuer credit rating on the asset manager.

Edelman is issuing a $1.4 billion first-lien term loan and $495 million second-lien term loan to help finance private equity firm Hellman & Friedman LLC's planned acquisition of Financial Engines Inc. and repay existing Edelman debt, S&P noted. The proposed first-lien debt consists of a $1.4 billion term loan and $150 million revolver. Hellman & Friedman owns a majority interest in Edelman Financial Services LLC.

As part of the deal, Edelman Financial Services will be merged with Financial Engines.

A combination with Financial Engines is expected to expand and diversify Edelman's business. But at the same time, the incremental debt is expected to weaken Edelman's leverage and interest coverage compared to S&P's earlier projections, the rating agency warned.

The negative outlook reflects the company's weak pro forma interest coverage and leverage even though both ratios are expected to improve over 2019 as the company grows EBITDA organically and realizes cost synergies, S&P said.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.