Moody's ups Atlantic Broadband loan

Moody's Investors Service said it upgraded Atlantic Broadband Finance LLC's senior secured bank credit facility to B1 from B2 and affirmed the company's B2 corporate family rating and Caa1 senior subordinated notes following Atlantic's modest ($62 million) acquisition of G-Force, a small cable company.

The outlook is stable.

Moody's said it upgraded the bank credit facility based on its priority in the capital structure and meaningful junior capital.

The agency said Atlantic Broadband's ratings reflect high financial risk (pro forma leverage of about 7x debt to EBITDA), low interest coverage and lack of scale. Furthermore, while the acquisition of G-Force is expected to increase Atlantic Broadband's growth potential, it also increases execution risk and raises potential for integration challenges.

The ratings are supported by the upgraded cable systems, meaningful asset value and expectations for moderate cash flow growth leading to deleveraging. In Moody's opinion, Atlantic Broadband's ratings can sustain the small increase in leverage (0.5x) due to the proposed acquisition, and the $3,000 per subscriber price paid is in line with recent acquisition prices paid by peers.

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