S&P assigns BB to Cogeco loan

S&P said it assigned BB issue-level and 3 recovery ratings to Cogeco Communications (USA) Inc.'s planned $900 million term loan B due in 2030, $400 million farm credit term loan due in 2028, and $250 million revolving credit facility due in 2028.

Financing subsidiary Cogeco Communications Finance (USA) LP issued the term loans and Cogeco US Finance LLC the revolver. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 55%) recovery in default.

The company will use the term loan proceeds along with $177 million of balance sheet cash and about a $130 million revolver draw to refinance its $1.58 billion term loan B due in 2025 and pay related transaction fees and expenses.

“Because the transaction is relatively leverage neutral, our BB issuer credit rating and stable outlook on Cogeco are unchanged. Furthermore, we view the transaction as modestly favorable because it extends Cogeco's debt maturity profile. Our estimated recovery in a simulated default improves to 55% from 50% because of fewer secured claims in a default scenario, still within the 50%-70% range, for a 3 recovery rating,” S&P said in a press release.

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