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S&P lowers CommScope, rates new debt BB, B
Standard & Poor’s said it lowered the ratings on CommScope Inc.’s senior secured and unsecured debt and removed the ratings from CreditWatch, where it was placed with negative implications in January.
S&P also said it lowered the rating on CommScope’s senior secured debt to BB from BB+ and revised the recovery rating to 2 from 1.
The 2 recovery rating indicates 70% to 90% expected default recovery.
S&P also said it lowered the rating on the company’s senior unsecured debt to B from BB- and revised the recovery rating to 6 from 4.
The 6 recovery rating indicates 0 to 10% expected default recovery.
The agency also said it removed the B rating on CommScope Holding Co. Inc.’s paid-in-kind notes from CreditWatch negative. The recovery rating remains at 6.
S&P said it assigned a BB rating with a recovery rating of 2 to the company’s proposed $1.25 billion senior secured term loan B due 2022 and $500 million senior secured notes due 2020.
The agency also said it assigned a B rating with a recovery rating of 6 to the company’s proposed $1.5 billion senior unsecured notes due 2025.
CommScope Technologies LLC will be the borrower of the new unsecured notes, which will rank equal to the unsecured notes issued by CommScope Inc.
The proceeds from the loan and the secured notes will be used to fund most of the purchase price for its acquisition of TE Connectivity’s broadband network solutions business, S&P said.
It will use the proceeds of the secured notes to fully repay its secured term loan due 2017 and partially repay its secured term loan due 2018.
The corporate credit rating on CommScope remains at BB- and the outlook is stable.
The ratings reflect the higher mix of secured credit facilities with the addition of the new debt that CommScope plans to issue to fund the acquisition, S&P said.
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