S&P lowers CapRock, rates loans B, CCC+

Standard & Poor's said it lowered its ratings on CapRock Holdings Inc. to B from B+, adding that it based the rating action on greater uncertainty in the company's indirect government revenue stream as it faces a likely reduction in its largest customer's government contract and associated business, a corresponding greater dependence on new markets to generate discretionary cash flow and an increase in leverage after a refinancing and the acquisition of another communications company.

The outlook is stable.

At the same time, the agency said it assigned a B bank loan rating, at the same level as the corporate credit rating on the parent company and 4 recovery rating, to subsidiary CapRock Communications Inc.'s proposed $190 million senior secured first-lien credit facilities.

S&P said it also assigned a CCC+ bank loan rating, two notches below the corporate credit rating on the parent company and 5 recovery rating to the company's proposed $65 million senior secured second-lien term loan.

According to the agency, CapRock will use proceeds from the proposed term loans to acquire Arrowhead Global Solutions Inc. for $31.8 million and to refinance nearly all of CapRock's existing $168 million debt.

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