S&P rates RCN loan B

Standard & Poor's said it assigned a B rating to RCN Corp.'s (d/b/a Sidera Networks) proposed incremental $45 million term loan C under its existing senior secured credit facility with 4 recovery rating, which indicates expectation for 30% to 50% recovery.

S&P affirmed the B corporate credit rating.

The outlook is stable.

Sidera also plans to increase its revolver by $25 million to $50 million in the proposed transaction.

Proceeds will be used to fund the $42.5 million acquisition price for Cross Connect Solutions, Inc.

The ratings reflect a highly leveraged capital structure, significant competition in tier 1 markets and customer concentration, S&P said.

Tempering factors include strong demand for bandwidth, particularly in the wireless and financial services segments that Sidera serves, a recurring revenue stream bolstered by long-term contracts and solid profitability measures, the agency noted.

Pro forma leverage is expected to increase to about 5.8x total debt to last-12-month EBITDA as of Sept. 30, from 5.5x on a standalone basis and without the increased debt.

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