S&P affirms Grande Communications

Standard & Poor's said it affirmed its ratings on Grande Communications Holdings Inc., including the B- corporate credit rating, B- secured note rating and 4 recovery rating.

The agency said that this follows the company's announced proposed issuance of $25 million of additional secured notes, which are pari passu with the company's existing $168 million of secured notes.

The issuance of this additional debt, which is subject to consent from existing note-holders, is for general corporate purposes, S&P noted, stating that the ratings on Grande reflect its vulnerable business position in the face of substantial competition from Time Warner Cable Inc. and AT&T Inc.

The ratings also reflect Grande's small scale, margins constricted by a high cost structure and growing leverage, S&P said, adding that these factors are partially mitigated by the company's growing subscriber base and improving economies of-scale.

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