Moody's eyes Radiate for downgrade

Moody's Investors Service said it placed all its credit ratings for Radiate HoldCo, LLC on review for downgrade, including the B2 corporate family rating, the B2-PD probability of default rating, the B1 senior secured ratings and its Caa1 senior unsecured note rating. The outlook was changed to under review, from stable.

Radiate plans to buy three service areas from WideOpenWest Inc. for $661 million to Radiate’s Astound Broadband.

“Moody's views the transaction as credit negative. While the transaction will increase the scale of the Company and extend the network footprint, we believe the majority, if not all of the assets, are in overbuilt markets, and acquired at a multiple that will be incrementally leveraging. We estimate the transaction, if fully financed with debt, could increase leverage by up to .25x. With leverage near 6.7x (Moody's adjusted, LTM at the end of the last quarter), this transaction will delay the Company's deleveraging path. We expect any potential downgrades to be limited to one notch,” the agency said in a press release.

Moody’s said its review will focus on closing conditions, the acquisition financing, liquidity position, post-closing business strategy and financial policy and expected pro forma capital structure.

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