Moody's affirms Tele Columbus

Moody's Investors Service said it affirmed the ratings of Tele Columbus GmbH & Co. KG, formerly Tele Columbus AG & Co. KG, following the company's announcement that it will sell over 400,000 subscribers in Baden-Wurttemberg to Kabel BW Holding GmbH.

The ratings affirmed are as follows: corporate family rating at B1, senior secured bank facility due 2009 at Ba3, €245 million senior floating-rate notes due 2010 at B1 and €230 million senior subordinated notes due 2012 at B3.

Moody's noted that the subscriber sale, although resulting in an immediate reduction in an absolute debt level and an increase in cash, dilutes the company's value attributable to the bondholders. However, the ratings affirmation relies on the indication by the management of Unity Media GmbH, the company's shareholder, to use the proceeds to further deleverage Tele Columbus.

Further, Moody's said the flexibility under the terms and conditions of Tele Columbus' financing agreements allow a fairly broad use of proceeds from asset sales. The affirmation of the ratings does not assume the use of this flexibility.

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