S&P rates Fibertech loans B

Standard & Poor's said it assigned a preliminary B corporate credit rating to Fibertech Networks LLC and a preliminary B rating to the company's proposed $25 million senior secured revolver and $235 million term loan. The 4 recovery rating indicates expectation for 30% to 50% recovery in the event of payment default.

The outlook is stable.

Proceeds from the proposed term loan, coupled with an expected equity contribution of about $318 million, to fund the acquisition by Court Square Capital Partners.

"The preliminary ratings on Fibertech reflect what we consider its highly leveraged financial risk profile after the proposed recapitalization, including a high debt burden and our expectation for negative free operating cash flow through at least 2011 because of elevated capital expenditures to support new business growth," S&P analyst Gregg Lemos-Stein said in a statement.

Ratings also incorporate the assumption that enterprise and other telecom carrier demand for data and voice transport services swill support double-digit revenue and EBITDA growth over the next few years, resulting in leverage reduction from the 4.7x level projected for the end of 2010, the agency noted.

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