Moody's rates Knology loans B2

Moody's Investors Service said it affirmed Knology, Inc.'s B2 corporate family rating, changed the probability-of-default rating to B3 from B2 and assigned a B2 rating with a loss-given-default assessment of LGD3 (33%) to the company's proposed senior secured credit facility, consisting of $555 million term loan and $25 million revolver.

The outlook was changed to stable from developing.

Proceeds from the proposed facility will be used to refinance the company's existing senior secured first- and second-lien facilities and fund its $255 million cash acquisition of PrairieWave.

The B2 corporate family rating incorporates Knology's lack of scale, high financial risk and concerns over acquisition challenges and competition, the agency said, adding that the new probability-of-default rating reflects the lack of junior debt capital following the close of the transaction.

The ratings are supported by the company's upgraded network, high penetration of multiple services and reasonable diversification of cash flow among its markets relative to other companies of similar size, Moody's said.

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