Moody's cuts Mediacom bonds, confirms loan

Moody's Investors Service said it lowered its ratings for the senior unsecured bonds of intermediate holding company Mediacom LLC, a wholly owned subsidiary of Mediacom Communications Corp., confirmed the existing Ba3 ratings for the senior secured bank credit facilities available to various subsidiaries of Mediacom LLC, and assigned Ba3 ratings for the proposed bank credit facilities being arranged for the LLC subsidiaries.

Moody's also affirmed all ratings for Mediacom and its other subsidiaries, including Mediacom Broadband LLC and its own operating subsidiaries. The outlook is stable.

More specifically, Moody's affirmed Mediacom Communications Corp.'s senior implied rating at B1, issuer rating at Caa1, liquidity rating at SGL-2, and $172.5 million 5.25% senior unsecured convertible notes due 2006 at Caa1. Moody's downgraded Mediacom LLC's $200 million 8.5% senior unsecured notes due 2008 to B3 from B2, $125 million 7.875% senior unsecured notes due 2011 to B3 from B2, and $500 million 9.5% senior unsecured notes due 2013 to B3 from B2.

Moody's assigned Mediacom Southeast LLC et.al.'s $600 million senior secured revolver due 2013, $200 million senior secured term loan A due 2013, and $500 million senior secured term loan B due 2013 all Ba3 ratings, and confirmed the Ba3 ratings of the $450 million (approximately $380 million remaining) senior secured revolver due 2008 and $100 million senior secured term loan due 2008.

Moody's also confirmed Mediacom Minnesota LLC et.al.'s $450 million (approximately $380 million remaining) senior secured revolver due 2008 and $100 million senior secured term loan due 2008 both at Ba3.

In addition, Moody's affirmed Mediacom Broadband LLC's $400 million 11% senior unsecured notes due 2013 at B2. Also, Moody's affirmed at Ba3 Mediacom Iowa LLC's $600 million senior secured revolver due 2010, $300 million senior secured term loan due 2010, and $500 million senior secured term loan due 2010.

Moody's said the senior implied rating continues to broadly reflect the risks associated with the company's high financial leverage and moderate interest and fixed charge coverage levels; execution risks related to the roll-out of new services, including digital video and high speed internet, and the pending roll-out of telephony services in partnership with Sprint, all of which have the potential to reverse recent negative performance trends and drive incremental cash flow growth and improved asset returns.

Nonetheless, the senior implied rating also continues to incorporate the benefits associated with the company's large size, improving technological profile and good geographic diversification which afford economies of scale and new business opportunities, and somewhat mitigate potential cyclical effects related to the economy and/or market-specific trends.

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