S&P gives Citizens notes BB+

Standard & Poor's said it assigned a BB+ rating to $400 million of 7.875% senior unsecured notes due 2027 issued by Citizens Communications Co.

The notes were issued under Rule 144A with registration rights, the agency said, noting that it also affirmed all ratings on Citizens, including the BB+ corporate credit rating.

The outlook remains negative.

Proceeds of the new issue will be used to finance, in part, the Commonwealth acquisition, which was announced on Sept. 18, and is valued at $1.2 billion, including the assumption of roughly 228 million of Commonwealth net debt, S&P said.

The agency noted that the ratings on Citizens reflect a shareholder-oriented financial policy with an aggressive dividend payout and share repurchases, a heightened business risk profile resulting from rising competition from cable telephony and wireless substitution, which have caused access-line losses, integration risk from the acquisition of Commonwealth and longer-term risk to regulatory support.

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