Moody's rates CapRock loans Ba3, Caa1

Moody's Investors Service said it assigned Ba3 (LGD3, 32%) ratings to CapRock Communications Inc.'s planned $40 million first-priority senior secured revolver due 2012 and $150 million first-priority senior secured term loan due 2012, assigned a Caa1 (LGD5, 82%) rating to its planned $65 million second-priority senior secured term loan due 2013 and affirmed the corporate family and probability-of-default ratings at B2.

The outlook remains stable.

The rating action follows CapRock's announced plans to raise a $255 million senior secured credit facility (including a $40 million unused revolver), the proceeds of which will be used to refinance essentially all of its existing debt obligations totaling $168 million and fully fund the acquisition of Arrowhead Global Solutions, Inc.

The agency said the planned acquisition will cause an increase in pro forma adjusted leverage to roughly 5.25x, but the affirmation of CapRock's ratings reflects Moody's expectation that this modest deterioration will be offset by improvement in the company's diversification of contractual revenue sources and its growth prospects over the next few years.

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