Fitch assigns Connect II loans, notes B+

Fitch Ratings said it assigned B- long-term issuer default ratings to Connect Holding LLC and Connect Holding II LLC (Brightspeed). Additionally, the agency rated Brightspeed’s senior secured term loans, notes and revolver B+/RR2. Connect Holding is the parent of Connect Holding II LLC and guarantees the latter's debt.

Brightspeed is acquiring a network from Lumen Technologies Inc.

The senior secured financing will consist of a $600 million five-year senior secured revolver, a $1 billion 6.5-year senior secured term loan A, a $2 billion seven-year senior secured term loan B and $1.865 billion of seven-year senior secured notes.

Fitch said it forecasts Brightspeed's initial gross leverage (total debt/operating EBITDA) at about 6.6x at yearend 2022 and then climb to about 8x in 2023 as it builds out its broadband network.

“The BB IDR and senior unsecured note ratings of Embarq Corp., currently a subsidiary of Lumen Technologies, Inc, are on rating watch negative pending the close of the transaction with Brightspeed. Following the close of the transaction, Fitch anticipates a multi-notch downgrade of Embarq's IDR and senior unsecured notes. The senior secured term loans, notes and revolver of Connect Holding II will be structurally senior to Embarq's senior unsecured notes,” the agency said in a press release.

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