Moody’s rates Midcontinent loan Ba1

Moody's Investors Service said it assigned a Ba1 instrument-level rating to Midcontinent Communications' proposed $285 million senior secured term loan B.

In connection with the transaction, the company will also upsize its existing $125 million revolving credit facility to $250 million.

Proceeds from the new term loan, along with a combination of cash on hand and revolver usage will be used to pay off the company's existing term loans A and B, purchase the Kansas assets of WideOpenWest and fund transaction fees. These transactions will occur simultaneously at the close of the transaction, expected late 2016 or early 2017.

Midcontinent’s B1 corporate family rating, B1-PD probability of default rating, Ba1 senior secured rating and B3 senior unsecured rating remain unchanged.

The outlook remains stable.

Total leverage, pro forma for these transactions and following the company's $125 million recent note issuance, raises pro forma leverage by about 0.3 times, to 4.9 times (Moody's adjusted debt/EBITDA), as of the period ended in June. The agency expects the revolver capacity to remain close to pre-deal levels in terms of dollars, despite usage.

Moody’s also said it projects availability will approach 75% by the end of 2017 with repayment during the year.

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