Moody's rates Securus notes B2

Moody's Investors Service said it affirmed Securus Technologies Inc.'s B3 corporate family and probability-of-default ratings, B2 second-priority senior secured debt rating and SGL-3 speculative grade liquidity rating.

Moody's assigned a B2 rating (LGD3, 40%) to the company's second-priority senior secured add-on notes.

The outlook remains stable.

The rating action follows the company's announcement that it would issue $40 million of add-on notes to fund its acquisition of Syscon Holdings, Ltd.

The corporate family rating reflects Moody's belief that the company can withstand the modest increase in pro-forma leverage. The rating also recognizes the company's good market share, contractual revenue streams and high renewal rates.

The rating also reflects the company's narrow focus in a highly competitive segment of the telecommunications industry, its modest size, low operating margins, significant leverage and lack of free cash flow, the agency said.

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