Moody’s rates Birch facilities B3

Moody's Investors Service said it assigned a B3 corporate family rating and Caa1-PD probability of default rating to Birch Communications, Inc.

The agency also assigned B3 (LGD3-35%) ratings to the company's proposed $500 million senior secured first-lien credit facilities, which consist of a $450 million term loan due 2020 and a $50 million revolver due 2019.

The outlook is stable.

Proceeds will be used to refinance existing debt at Birch and fund the acquisition of Cbeyond, Inc., a telecom provider based in Atlanta.

Moody’s said the ratings for the debt instruments reflect both the probability of default of Birch, to which Moody's assigns a Caa1-PD, and individual loss given default assessments. The senior secured credit facilities are rated B3 (LGD-3, 35%), in line with the corporate family rating, given that the credit facilities comprise the majority of debt in the capital structure.

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