S&P rates Alaska Communications loan B+

Standard & Poor's said it assigned a B+ bank loan rating with a recovery rating of 3 to Alaska Communications Systems Holdings Inc.'s proposed $57 million incremental term loan, which is an add-on to the existing $375 million term loan B.

S&P affirmed the company's B+ corporate credit rating, the B+ debt rating and 3 recovery rating on the existing term loan B and Alaska Communications Systems Group Inc.'s B+ corporate credit rating. The outlook is stable.

Proceeds from the proposed incremental term loan will be used for a cash tender offer for $56.9 million of 9 7/8% senior notes due 2011, which will allow the company to reduce interest costs by roughly $3 million annually. Pro forma total debt to EBITDA is around 3.9x.

S&P said the ratings reflect significant competitive pressure within the limited Alaskan telecommunications market and a shareholder-oriented financial policy.

Tempering factors include expectations for healthy growth in the wireless business, coupled with improved operating trends in the wireline segment, the agency said. As capital expenditures from wireless upgrades wind down, the company is expected to produce positive discretionary cash flow in the second half of 2006.

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