Moody’s changes Cogeco view to negative

Moody's Investors Service said it changed its outlook for Cogeco Communications (USA) Inc.'s to negative from stable and affirmed its B1 corporate family rating and B1-PD probability of default rating. The agency also affirmed the B1 senior secured bank credit facilities at Cogeco Communications Finance (USA), LP, Cogeco US Finance, LLC and Cogeco Financing 2, LP and assigned a negative outlook to all three entities.

“The negative outlook incorporates Moody's view that over the next twelve months revenues will decline by 2%-4%, with EBITDA margins remaining strong and relatively steady, in the mid 40% range with some upside possible. Free cash flow will range between approximately $115 million-$130 million, net of borrowing costs averaging in the high 5% range, and lower capital intensity with capital expenditures falling to the low 20% range of revenue.

“Moody's projects leverage could range between 4.7x to 4.8x without further debt repayment (but could fall to mid 4x with all free cash flows used to repay outstanding revolving credit). Retained cash flow to net debt will be near 16%. Key assumptions are broadband subscribers falling by mid-single digit percent and video subscribers losses accelerate to the mid to high teens percent range,” the agency said in a press release.

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