Moody's might lower One Communications

Moody's Investors Service said it placed the ratings of One Communications Corp. on review for possible downgrade, including its B2 corporate family and probability-of-default ratings and B2 (LGD4, 51%) senior secured bank credit facility.

The review follows the announcement by the company that it has entered into a forbearance agreement with its lenders regarding a potential covenant breach for the quarter ended Sept. 30 due to a decline in its EBITDA and is seeking an amendment.

The company's adjusted debt-to-EBITDA ratio was 3.3 times at Sept. 30. The agency said this is moderate for a competitive local exchange carrier, and Moody's believes there is a low probability of a default or impairment at this point assuming the company either cures its default with an equity injection or attains relief from the covenant pressure for a reasonable period of time.

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