S&P rates Windstream B-, facility BB-

S&P said it assigned a B- rating to Windstream Holdings Inc. after it emerged from bankruptcy. The agency also assigned a BB- rating with a 1+ recovery rating to subsidiary Windstream Services LLC’s $500 million first-out senior secured revolving credit facility. The 1+ recovery rating indicates S&P’s expectation for full (greater than 100%) recovery in the event of default.

Concurrently, S&P assigned a B issue-level rating and 2 recovery rating to Windstream Services’ senior secured first-lien credit facility, which will consist of $1.4 billion of notes, issued by Windstream Escrow LLC and a $750 million term loan B. The 2 recovery rating indicates S&P’s expectation for meaningful (70%-90%; rounded estimate: 70%) in the event of a payment default.

“If Windstream successfully executes on its strategy to profitably grow its consumer broadband subscriber base while moderating enterprise revenue declines, we believe the company could reverse top-line and EBITDA declines, enabling it to reduce leverage over time, although this is currently not incorporated in our base-case forecast,” S&P said in a press release.

The outlook is stable because “Windstream’s fiber-to-the-premise network investments will help it moderate revenue declines while maintaining its EBITDA margin in the mid-30% area such that adjusted leverage remains comfortably below 5x,” S&P said.

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