Moody's affirms ITC^DeltaCom

Moody's Investors Service said it affirmed ITC^DeltaCom, Inc.'s B3 corporate family and probability-of-default ratings and SGL-1 speculative-grade liquidity rating, affirmed Interstate Fibernet, Inc.'s $10 million first-lien senior secured revolving credit facility due 2012 and $225 million first-lien senior secured term loan due 2013 at B2 (LGD3, 35%) and withdrew the Ba3 (LGD1, 2%) and B3 (LGD4, 51%) ratings assigned to ITC^DeltaCom's proposed $30 million first-lien senior secured revolver due 2015 and proposed $325 million first-lien senior secured notes due 2016, respectively.

The outlook remains positive.

The rating actions follow the company's decision to withdraw its senior notes offering due to weaker market conditions, which would have increased pricing 200 to 250 basis points compared to the company's original expectations, and not pursue the new revolver.

The agency said the proposed offering would have lessened refinancing risk, given the July 2012 maturity of the existing $10 million revolver and the July 2013 maturity of the existing term loan.

However, the positive outlook reflects ITC^DeltaCom's fundamental performance, demonstrated ability to maintain credit metrics during the economic downturn and expectations that it would benefit from economic recovery in its markets, Moody's said. Furthermore, the proposed transaction would have increased the debt-to-EBITDA ratio to 4.1 times from 3.9 times.

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