Moody's rates CapRock

Moody's Investors Service said it assigned initial ratings to CapRock Holdings Inc. of B2 corporate family, B2 first-priority senior secured and B3 second-priority senior secured. The outlook is stable.

The corporate family rating is supported by 1) CapRock's strong operating performance over the last few years serving a largely blue chip customer base, 2) the contractual nature of much of CapRock's service revenues, 3) healthy customer retention rates, helped by the existence of high customer switching costs and high quality service levels and 4) Moody's expectation that CapRock will generate modestly positive free cash flow in each of the next two years, the agency said.

Moody's added the ratings are constrained by 1) the significant concentration of revenues to one key customer, 2) Moody's belief that satellite bandwidth demands of this specific customer may decline gradually over the next few years, 3) the competitive nature of the satellite communications service industry generally and 4) the company's small scale.

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