Moody's rates One Communications loans B1

Moody's Investors Service said it affirmed One Communications Corp.'s B1 corporate family rating, downgraded its probability-of-default rating to B2 from B1 and assigned B1 (LGD3, 32%) ratings to the company's proposed $30 million senior secured revolving credit facility and $560 million first-lien term loan.

The outlook was changed to negative from stable to reflect lower-than-expected revenue growth and free cash flow generation.

The company will use the proceeds from the new facility to repay all amounts outstanding under its existing bank facilities.

The agency said the B1 corporate family rating reflects the company's moderate financial risk and free cash flow generation, in addition to the company's larger operating scale in the northeastern United States, relative to its competitive local exchange carrier peers.

The ratings are tempered by the highly competitive operating environment for competitive local exchange carriers, the ongoing integration of three companies with distinct corporate cultures and operating systems and the potential for further acquisitions, which may postpone debt reduction, Moody's said. One Communications was formed via a combination of Choice One Communications, CTC Communications and Conversent Communications in July 2006.

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