S&P lifts Cequel loans, notes unchanged

Standard & Poor’s said the proposed the upsizing of Cequel Communications Holdings I LLC’s 5 1/8% senior notes due 2021 by $500 million to $1.25 billion does not affect their B- rating and 6 recovery rating.

The 6 recovery indicates 0 to 10% expected default rating.

The agency also said it raised the rating on Cequel Communications LLC’s $2.9 billion of secured bank debt to BB from BB- and revised the recovery rating to 1 from 2, reflecting more favorable recovery prospects.

The 1 recovery rating indicates 90% to 100% expected default recovery.

Cequel will use proceeds from $500 million of privately placed tack-on unsecured notes, plus $100 million of cash, to fund a $600 million cash distribution to its private equity owners, the agency said.

Pro forma for the transaction, S&P said it expects debt leverage to be in the 6x range, up only modestly from the current mid-5x range and consistent with a highly leveraged financial risk profile.

As a result, the B+ corporate credit rating and stable outlook are not affected by the proposed debt increase, the agency said.

The ratings reflect good cable industry fundamentals, robust plant bandwidth and only limited competition, S&P said.

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