Moody's lowers WideOpenWest, rates loans B2, Caa2

Moody's Investors Service said it downgraded WideOpenWest Finance, LLC's corporate family and probability-of-default ratings to B3 from B2 following the announcement of a $400 million dividend financed with new debt.

The agency also assigned B2 (LGD3, 38%) ratings to the company's proposed $100 million first-lien revolver and $925 million first-lien term loan and a Caa2 (LGD5, 89%) rating to its proposed $285 million second-lien loan.

The outlook is stable.

The agency said the downgrade reflects WideOpenWest's higher financial risk, evidenced by the high leverage, weak coverage of interest and capital expenditures and distribution well in excess of the company's equity pro forma the transaction. Moreover, in Moody's view, company equity sponsor Avista Capital Partners may be more willing to assume financial risk going forward given the already sizable return (over 100% one-year return on invested capital).

The company's upgraded and efficient network, expectations for a fairly rapid decline in leverage driven by good operating performance and growth opportunities, and management's strong track record support the ratings, Moody's added.

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