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Moody's Investors Service Inc.

Moody's Affirms AP Core Holdings II, LLC's Credit Ratings, Outlook Stable

Strategic Insights

— 2 min read

Moody's Investors Service has affirmed AP Core Holdings II, LLC's ("AP Core") B3 corporate family rating (CFR) and B3 backed senior secured first lien bank credit facility, with an outlook changed to stable from negative. The affirmation reflects the continued improvement in operating performance, driven by the migration of traffic to Google ad manager and other initiatives, which is expected to continue in 2025. AP Core's leverage levels are currently high (7.1x as of LTM Q1 2025), but the company expects leverage to decline below 5x in 2025 driven by EBITDA growth and required debt repayment.

Key Takeaways:

  • AP Core's B3 CFR reflects the company's very high leverage levels, significant related party transactions, low EBITDA margins, elevated dependence on desktop traffic, and competitive industry conditions.
  • The company's credit profile also reflects its scale as a leading online content aggregator, diversified and personalized content offerings, and operating initiatives that have led to improved operating performance.
  • AP Core's liquidity is adequate, with $453 million of cash on the balance sheet as of Q1 2025, and free cash flow is expected to improve in 2025 driven by better operating results.
  • The company will continue to contend with high interest expense and capex levels, in addition to required amortization payments.
  • AP Core has completed several modest-sized acquisitions to improve its service offering and may consider additional purchases going forward.
  • The company is expected to continue to pursue dispositions of non-core assets that could be an additional source of liquidity.
  • College Parent, L.P. (College Parent) is the parent company of AP Core, and Apollo Global Management, Inc. and Verizon Communications Inc. own approximately 90% and 10% of College Parent's common equity, respectively.
  • AP Core's revenue totaled approximately $3.7 billion LTM ended Q1 2025.
  • The principal methodology used in these ratings was Business and Consumer Services, published in November 2021.
  • AP Core's ratings could be downgraded if leverage was expected to be sustained above 7x (as calculated by Moody's) due to continuing declines in EBITDA, additional debt issuance, or removal of additional assets from the credit group.
  • AP Core's ratings could be upgraded if the company demonstrates organic revenue growth of at least the low-to-mid-single digits with expanding EBITDA margins, and sustains leverage below 5x (Moody's adjusted) with a good liquidity profile.

Statistics:

  • 7.1x: AP Core's leverage level as of LTM Q1 2025
  • 7.9x: AP Core's leverage level excluding standard lease adjustment as of LTM Q1 2025
  • $453 million: Cash on the balance sheet as of Q1 2025
  • 35%: Availability on the $150 million revolving credit facility if existing leverage levels are above the net first lien leverage covenant ratio
  • 5%: Adjusted FCF to debt ratio needed for rating upgrade
  • $4.6 billion: Buyout transaction totaling approximately $4.6 billion for the reorganized VMG assets
  • 90% and 10%: Ownership percentage of Apollo Global Management, Inc. and Verizon Communications Inc. of College Parent's common equity, respectively

Sources:

  • Moody's Investors Service, "Moody's affirms AP Core Holdings II, LLC's B3 credit ratings, outlook stable" (no date stated in the text)
  • Moody's Ratings, "Business and Consumer Services", published in November 2021, available at https://ratings.moodys.com/rmc-documents/356424.

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