Moody’s gives Consolidated notes B3

Moody's Investors Service said it assigned a B3 rating to the proposed $200 million senior unsecured note offering of Consolidated Communications Finance II Co. and affirmed Consolidated Communications, Inc.'s existing B1 corporate family rating and B1-PD probability of default rating.

The outlook remains stable.

The company intends to use the net proceeds from the offering to finance the cash consideration of the acquisition of Enventis Corp., to pay the fees and expenses in connection with the acquisition, to repay existing debt of Enventis and to repay a portion of Consolidated's outstanding 10 7/8% senior notes due 2020 or its incremental term loan facility due 2020.

The pending acquisition is anticipated to close in the fourth quarter of 2014 and supports Consolidated's strategic focus on broadband and commercial services, and enhances the company's long-term prospects. The combined company will also have improved opportunities for success-based expansion into new markets.

Moody's said it expects the company to continue generating positive free cash flow because the transaction will be approximately neutral to free cash flow upon full integration.

Upon close of the acquisition, Consolidated Communications, Inc. will assume the new notes and the ratings will be moved to that entity.

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