S&P rates Homebase notes, loan

Standard & Poor's said it assigned its B+ corporate credit rating to Homebase Acquisition LLC, the parent company of Consolidated Communications Illinois Holdings Inc. and Consolidated Communications Texas Holdings Inc.

The outlook is stable.

Simultaneously, S&P assigned its B+ bank loan rating and a recovery rating of 3 to the $427 million secured bank loan facility co-borrowed by Homebase indirect subsidiaries Consolidated Communications Acquisition Texas Inc. and Consolidated Communications Inc.

In addition, S&P assigned its B- rating to the $240 million senior unsecured notes due 2014 issued by co-issuers Consolidated Communications Texas Holdings Inc. and Consolidated Communications Illinois Holdings Inc. (the respective holding companies of the co-borrowers).

Homebase Acquisition LLC and its subsidiaries are collectively known as "Consolidated Communications."

S&P said ratings on Consolidated Communications reflect the company's high debt leverage due to the largely debt-financed TXU Communications acquisition, geographic concentration (Illinois and Texas), and integration risk related to the acquisition.

The acquisition, expected to close by mid 2004, will significantly increase Consolidated Communications' access lines to a total of about 262,000. These factors are somewhat mitigated by the relatively stable revenue of the telephone operations, the supportive regulatory environment, and the depth of management experience at the company, S&P added.

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