S&P cuts One Communications

Standard & Poor's said it lowered its corporate credit rating on One Communications Corp. to B- from B and placed the rating on CreditWatch with negative implications. The agency also said it lowered the rating on the company's senior secured first-lien credit facility to CCC+ from B- and placed it on CreditWatch with negative implications as well. The 5 recovery rating remains unchanged, indicating an expectation for 10% to 30% recovery in the event of default.

The downgrade reflects concerns regarding the company's litigation with Verizon Communications Inc. with respect to access charges billed by predecessor Choice Communications New York over the period of April 2003 to September 2005, S&P said.

While One Communications was unable to file its audited 2009 financial statements on time, it did receive waivers from its bank lenders, the agency said.

However, there also is a clause that renders a default if ultimate litigation damages are determined to be in excess of $7.5 million, S&P said.

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