S&P rates FairPoint loan

Standard & Poor's said it assigned its B+ bank loan rating and a recovery rating of 3 to the proposed $450 million senior secured credit facility of FairPoint Communications Inc. The existing ratings on FairPoint, including the B+ corporate credit rating, have been affirmed.

The outlook remains negative.

S&P said the ratings reflect FairPoint's aggressive leverage and limited financial flexibility despite its good business position. The company became highly leveraged in part by using debt to finance the acquisition of about 30 independent RLECs since 1991.

FairPoint's future EBITDA and free cash flow are likely to be relatively flat because the company's markets are sparsely populated, have below national median income, and lack major growth opportunities.

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