Fitch rates Windstream loan BBB-, notes BB+

Fitch Ratings said it assigned a BBB- senior secured debt rating to Windstream Corp.'s proposed senior secured term loan, which could total up to $300 million, and a BB+ to its proposed offering of up to $700 million of senior notes. Windstream's issuer default rating is BB+, and the outlook is stable.

Proceeds from the offerings will be used to refinance existing debt.

The agency said the key factors that support the rating include the following: (a) expectations for the company to generate strong operating and free cash flows and to have access to ample liquidity; (b) revenues have become more diversified as recent acquisitions have brought additional business and data services revenue; and prospects for improved free cash flow as certain investments wind down in 2013.

According to Fitch, the following concerns are embedded in the ratings: higher leverage, competition for consumer voice services and integration risk.

Pro forma for the Paetec acquisition and excluding noncash actuarial losses on its pension plans, latest 12 months leverage as of Sept. 30 was 3.75 times. Fitch believes leverage is slightly high for the current rating category.

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