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Moody's cuts Eschelon to SGL-3
Moody's Investors Service said it downgraded Eschelon Operating Co.'s speculative grade liquidity rating to SGL-3 from SGL-2.
Moody's said the downgrade is based on Moody's view that Eschelon will use a significant amount of its cash balance to essentially fund its increased capital expenditures while adding no alternate sources of liquidity.
Also, the SGL-3 rating reflects Moody's expectation that Eschelon's liquidity profile will be "adequate" for at least the next 12 months, and specifically that cash balances, while declining, are sufficient to meet the company's operating and capital needs.
Moody's noted that Eschelon filed an S-1 on May 6. The estimated proceeds are $80 million, and Moody's said it anticipates that a portion of the proceeds would be used to partially redeem the company's outstanding 8.375% notes.
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