S&P rates Knology shelf CCC+, CCC

Standard & Poor's said it assigned a preliminary CCC+ debt rating and CCC preferred stock rating to the $150 million universal shelf registration filed by Knology Inc. and affirmed the company's ratings, including its B corporate credit rating, B first-lien bank loan with a recovery rating of 3 and CCC+ second-lien bank loan with a recovery rating of 5.

The outlook remains stable.

S&P said the ratings for Knology reflect the company's vulnerable market position and uncertain long-term sustainability as a cable overbuilder providing undifferentiated services in a fiercely competitive landscape and its small scale, which limits its pricing power in negotiating contracts. The ratings also reflect an unfavorable cost position relative to the incumbent cable operators, high leverage and limited long-term liquidity if the company loses subscribers to competitors.

Tempering factors include Knology's reputation for excellent customer service, which has translated into superior average revenue per user in established; a fully upgraded plant with two-way capability and the continued expectation of healthy revenue and EBITDA growth, the agency said.

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