DBRS: Cogeco under review

DBRS said it placed Cogeco Cable Inc.'s senior secured debt rating of BBB (low) under review with negative implications following news that the company has entered into a definitive agreement to acquire Atlantic Broadband Group, LLC for $1.36 billion.

The transaction is subject to approval by certain regulatory authorities.

Atlantic Broadband is a privately owned, independent cable system operator serving about 252,000 basic video customers in Pennsylvania, Florida, Maryland, Delaware and South Carolina.

Atlantic generated revenue of $329 million and EBITDA of about $149 million in 2011.

Cogeco believes the acquisition provides an attractive entry into the U.S. market and provides the company with a platform for further growth and penetration by leveraging its core competencies, DBRS said.

The negative implications of the review status reflects a concern about Cogeco's ability to execute and compete effectively in a new market with characteristics that differ significantly from the company's core operating regions, the agency said.

The acquisition also weakens Cogeco's financial risk profile beyond levels appropriate for the current rating category, DBRS added.

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