Micro Focus loans fall in secondary trading after poor results

By Max Bower

(LPC) - FTSE 100 software group Micro Focus (MCRO.L) saw its 470m euro (£413 million) term loan B drop over 150bp in secondary trading on Monday, after its shares plunged by more than 40% following weaker than expected results.

The loan was quoted with an average bid of 98.5 on Monday afternoon, down from an average of 100.16 on Friday, according to Thomson Reuters LPC data.

One broker quoted the facility even lower, with a bid price of 97.75.

Micro Focus’s US$3.485bn (£2.5) B3 and $1.515bn B2 dollar term loans were also trading lower on Monday, with one broker quoting them both at 99 bid, down from 100 and 99.75 respectively on Friday.

The company raised a US$5.5bn equivalent leveraged loan last April to finance its purchase of Hewlett Packard's software business.

Berkshire-based Micro Focus cut its revenue outlook further than expected in its results on Monday, with CEO Chris Hsu also announcing his departure from the firm.

It now expects revenue in the year to October 31 to fall by between 6 to 9%, compared with a forecast in January of a 2-4% drop, a prediction that sent its shares down 17% at that time.

The FTSE 100 company, which manages older software for customers including banks and airlines, also reported lower than expected licence income, wiping £4.6bn (US$6.4bn) off its market value on Monday.

Micro Focus bought HPE's (HPE.N) software business for US$8.8bn in 2017, becoming one of Europe’s largest software firms in the process.

The deal included the old Autonomy business, another British firm bought by the U.S. company in an ill-fated deal five years earlier.

"We're finding the integration harder than we'd anticipated or planned," Executive Chairman Kevin Loosemore told Reuters. "(We have) no regrets at all (on the deal but) the returns clearly may be delayed slightly."

(Editing by Christopher Mangham and Tessa Walsh)