S&P: Hawaiian Telcom loan B

S&P said it assigned a B rating to Hawaiian Telcom Communication Inc.'s $320 million delayed draw term loan, which consists of a $90 million five-year tranche and $230 million six-year tranche.

The senior secured term loan is part of a $350 million credit facility that includes an unrated $30 million revolver.

The recovery rating on the new term loan is 3, indicating 50% to 70% expected default recovery.

The proceeds will be used to repay the $291 million outstanding on its existing term loan B due June 2019, fund capital expenditures and for general corporate purposes, S&P said.

The B corporate credit rating and stable outlook on parent company, Hawaiian Telcom Holdco Inc., is unchanged.

Pro forma for the transaction, S&P said it expects leverage to increase modestly to the mid-3x range from a previous forecast of 3.2x for year-end 2017.

The agency also said it expects free operating cash flow-to-debt to be less than 5% over the next couple years.

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