S&P cuts Time Warner Telecom notes to CCC+, rates Holdings loans B

Standard & Poor's said it affirmed its B corporate credit and CCC+ senior unsecured debt ratings for Time Warner Telecom Inc. and its intermediate holding company, Time Warner Telecom Holdings Inc.

The agency said it lowered the rating on the Time Warner Telecom Holdings' $240 million senior secured second-lien floating-rate notes to CCC+ from B and removed the ratings from CreditWatch, where they were placed with negative implications on Sept. 1 due to concerns about the company's ultimate debt repayment ability and an uncertain competitive environment.

S&P said it also assigned a B rating to Time Warner Telecom Holdings' $110 million secured revolving credit facility and $200 million secured term loan B, with a 5 recovery rating.

The outlook is negative.

Borrowings under the term loan will be used to fund capital expenditures.

The agency said its affirmation reflects its assessment that Time Warner Telecom's business risk, while still vulnerable, continues to generate EBITDA and has potential to achieve a meaningful net free cash flow positive position over the next several years as it expands its revenues.

The downgrade of the notes to CCC+ reflects the fact that it is junior to the senior secured first-lien bank debt, which is considered to have minimal value in a default or bankruptcy, said the agency.

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