Moody's rates Gabriel loans B2

Moody's Investors Service said it assigned B2 (LGD3, 33%) ratings to Gabriel Communications Finance Co., Inc.'s $10 million first-lien secured revolving credit facility due 2013 and $250 million first-lien secured term loan due 2014 and affirmed the company's B2 corporate family rating, B3 probability-of-default rating and B2 existing senior secured revolving credit facility due 2011 and senior secured term loan due 2012.

The outlook is stable.

The new facilities are being enter into in connection with the proposed merger between parent company NuVox, Inc. and Florida Digital Network, Inc. The proceeds of the new credit facilities will be used to refinance the existing debt at NuVox and Florida Digital and to fund a special dividend of $130 million to the combined company's shareholders.

The agency said the B2 corporate family rating reflects NuVox's challenging position as a competitive local exchange carrier serving a footprint predominantly overlapping AT&T Inc.'s territories, substantial business risk, relatively high pro forma debt-to-EBITDA ratio of 3.5x, relatively moderate size and the potential for more acquisitions.

The B2 rating is supported by NuVox's greater scale in the Southeastern markets as a result of the merger, given the large network overlap of the two companies, and the potential for generating EBITDA growth driven by merger synergies, Moody's said.

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