(The following statement was released by the rating agency)
Oct 11 - Standard & Poor's Ratings Services today assigned its 'B-' issue-level rating and '6' recovery rating to Cequel Communications Escrow I LLC's proposed $500 million of senior unsecured notes due 2020, with Cequel Communications Escrow Capital Corp. as co-issuer. The '6' recovery rating indicates expectations for negligible (0%-10%) recovery in the event of a payment default. The company will use proceeds to fund a portion of the purchase price for the acquisition of cable-TV operator Cequel Communications Holdings LLC by BC Partners and the Canada Pension Plan Investment Board. Upon completion of the transaction, Escrow I and Escrow Capital will be merged into Cequel Communications Holdings I LLC (Cequel) and Cequel Capital Corp., respectively. Our 'B+' corporate credit rating and stable outlook on Cequel remain unchanged, as does the 'BB-' issue-level rating and '2' recovery on subsidiary Cequel Communications LLC's secured credit facilities, and the 'B-' issue-level rating and '6' recovery rating on Cequel's existing unsecured notes.
Pro forma for the transaction, including redemption of the preferred interest at parent Cequel Communications Holdings LLC, leverage modestly increases to 6.3x from 5.8x, based on performance for the 12 months ended June 30, 2012. This result remains within the parameters of the current rating, given our assessment of the company's "satisfactory" business risk profile and "highly leveraged" financial risk profile under our criteria.
For the credit profile, see the rationale published on July 12, 2012 on RatingsDirect. For the full recovery analysis, see the recovery report to be published shortly on RatingsDirect.
RELATED CRITERIA AND RESARCH
-- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
-- U.S. Telecom And Cable Companies' Maturities Are Manageable, But Lower-Rated Issuers Face Some Liquidity Challenges, July 23, 2012
-- A Matter of Policy: U.S. Telecom Companies Maintain High Dividend Payouts, But For How Long?, May 30, 2012
-- A Matter of Policy: U.S. Cable And Satellite-TV Companies Ratchet Up Shareholder Payouts, May 16, 2012
-- Top 10 Investor Questions: U.S. Telecom And Cable Industries, May 10, 2012
-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Cequel Communications Holdings I LLC
Corporate Credit Rating B+/Stable/-- New Rating Cequel Communications Escrow I LLC Cequel Communications Escrow Capital Corp. (co-issuer)
$500 Mil. Sr. Unsec. Notes Due 2020 B-
Recovery Rating 6
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at
. All ratings affected by this rating action can be found on Standard & Poor's public Web site at . Use the Ratings search box located in the left column. (New York Ratings Team)