Moody's rates Knology loans B3, Caa2

Moody's Investors Service said it assigned a B3 senior implied rating to Knology Inc., a B3 rating to its proposed senior secured first-lien bank facilities and a Caa2 rating to its proposed senior secured second-lien term loan.

The bank facilities include a $25 million (undrawn at close) first-lien revolver maturing 2010 and a $165 million first-lien term loan maturing 2010 as well as a $115 million second-lien term loan maturing 2011.

The outlook is stable.

Moody's said the ratings reflect the company's high leverage and low coverage, lack of scale and financial flexibility relative to its competitors, execution risk as expansion continues, and concerns over the long-term viability of Knology's overbuilder business model.

The company benefits, however, from its upgraded network; high penetration of multiple services, high ARPU; reasonable diversification of cash flow among its markets relative to other companies of similar size; and improved liquidity position pro forma the transaction.

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