Moody's downgrades Goodman

Moody's Investors Service said it downgraded Goodman Networks, Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and $325 million 12 1/8% senior secured notes due 2018 to Caa1 (LGD4) from B3 (LGD4). The outlook is stable.

The downgrade reflects Moody's expectation that Goodman's financial leverage will be sustained well above 5 times (Moody's adjusted) for the rating horizon, margins will contract and the company will consume cash.

The agency said Goodman's Caa1 corporate family rating reflects its high leverage, low margins, decreased cash flows and customer concentration and exposure to the capital expenditure cycles of its customers, which are represented largely by AT&T and DirecTV.

These negative factors are offset by Goodman's contract wins from other carriers such as Sprint, Verizon, Windstream, US Cellular and CenturyLink, which will enable the combined company to diversify its revenue away from AT&T and DirecTV, Moody’s said.

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