S&P assigns Windstream BB+

Standard & Poor's said it assigned its BB+ corporate credit rating to Windstream Corp., a company to be formed through the merger of Valor Communications Group Inc. with the wireline business to be spun off from Alltel Corp.

The outlook is negative.

At the same time, Windstream's proposed $3.3 billion senior secured credit facility was rated BBB-, one notch above the corporate credit rating and assigned a recovery rating of 1, the agency said.

S&P added that ratings on Windstream reflect an aggressive shareholder-oriented financial policy with a commitment to a substantial common dividend that limits potential debt reduction, accelerating competition for voice and data services from cable operators, which could lead to significant pricing and margin pressure, flat to declining revenues from its mature local telephone business and risks related to its transition to a stand-alone business.

Tempering factors include the company's position as the dominant provider of local and long distance telecommunications services in secondary and tertiary markets, which provides some limited insulation from competition, growth potential from data and internet services, its solid operating margin and moderate capital requirements, the agency said.

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