S&P affirms Midcontinent Communications

Standard & Poor's said that that it affirmed the B+ senior secured issue-level rating on Midcontinent Communications following the company's announcement that it plans a $50 million add-on to its existing $200 million term loan A and $50 million add-on to its $350 million term loan B.

The 3 recovery rating on both term loans is unchanged and indicates expectations for meaningful (50% to 70%) recovery in the event of payment default.

The company said that it will use the net proceeds, along with $18 million drawn from the $125 million senior secured revolver, to fund the acquisition of U.S. Cable's Minnesota assets and pay related fees and expenses.

S&P affirmed all other ratings on Midcontinent, including the B+ corporate credit rating. The outlook is stable.

Despite the increase in leverage from the acquisition to about 5.0 times from 4.6 times, the rating affirmation reflects the view that key credit measures are still supportive of the current rating and that the company has reasonable prospects to reduce leverage over the next few years from EBITDA growth and debt repayment, the agency said.

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