S&P rates Altice notes BB-, B-, CCC+

Standard & Poor’s said it assigned a B preliminary corporate credit rating to Altice US Holding I Sarl.

The agency said the new rating follows news that Altice SA entered into an agreement to acquire a 70% stake in Cequel Communications Holdings I LLC through Altice US Holding I, valuing Cequel at $9.1 billion.

The agency also said it assigned a preliminary BB- rating and preliminary 1 recovery rating to Altice US Holding I’s proposed $1.1 billion of senior secured notes due 2023.

The notes will initially be offered by Altice US Finance I Corp., S&P said, and then upon close of the transaction, the borrower will become Cequel Communications LLC.

The 1 recovery rating indicates 90% to 100% expected default recovery.

The proposed senior secured notes will rank pari passu with the existing senior secured credit facility at operating subsidiary, Cequel Communications.

The recovery rating on Cequel Communications’ existing senior secured credit facility will be unchanged at 1, with a rating of BB-.

S&P also said it assigned a preliminary B- rating and preliminary 5 recovery rating to the company’s proposed $300 million of senior notes due 2025.

The notes will initially be offered by Altice US Finance II Corp., the agency said, and then upon close of the transaction, the borrowers will become Cequel Communications Holdings I LLC and Cequel Capital Corp.

The 5 recovery rating indicates 10% to 30% expected default recovery.

S&P also said it assigned a preliminary CCC+ rating and preliminary 6 recovery rating to the company’s proposed $320 million of senior holding company notes due 2025, which will be issued by Altice US Finance SA. The 6 recovery rating indicates 0 to 10% expected default recovery.

The outlook is stable.

The ratings reflect the company’s high pro forma leverage and uncertainty regarding financial policy and future acquisitions in the United States, which could keep leverage elevated over the next few years, S&P said.

These factors are partially offset by Cequel’s position as an incumbent cable operator with good revenue visibility provided by subscription based services, its lack of material broadband competition in its markets and the potential for modest margin improvement, the agency said.

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