S&P puts GTT on watch

S&P said it placed the B+ corporate credit rating on GTT Communications Inc. on CreditWatch with negative implications.

The agency also said it placed the B+ rating on the company's senior secured term loan facility on CreditWatch with negative implications.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The CreditWatch placement follows news that the company will acquire Hibernia Networks, which will result in weaker credit metrics, S&P said.

GTT plans to buy Hibernia for $590 million in a transaction comprising $515 million in cash and about $75 million in shares of GTT common stock, the agency said.

The cash component of the transaction is expected to be financed with additional debt, S&P added.

The acquisition will increase GTT's product and customer diversity and reduce costs associated with the company's leased global network, the agency said.

But the higher debt levels will increase until cost synergies partly offset the debt by next year, S&P said.

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