S&P: Windstream senior unsecured rating on watch

Standard & Poor's said it affirmed its BB- corporate credit rating and BB+ senior secured debt rating on Windstream Corp. The outlook is stable.

At the same time, S&P placed Windstream's B+ senior unsecured issue rating on CreditWatch with negative implications.

These actions follow the company's announcement that it entered into a definitive agreement to acquire Paetec Holding Corp. in a stock-based transaction valued at $2.3 billion. The CreditWatch placement of the senior unsecured debt is based on S&P's expectations that the company plans to put in place an unsecured downstream guarantee on Paetec's debt.

S&P also placed the ratings on Paetec, including the B corporate credit rating, on CreditWatch with positive implications.

The B issue-level rating on Paetec's $100 million senior secured term loan and $125 million revolver are not on CreditWatch as S&P said it expects that debt will be repaid if the transaction closes, most likely in the first quarter of 2012, due to the change-of-control provision in the loan agreement.

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