Fitch: Pacnet notes BB/RR1

Fitch Ratings said it assigned Pacnet Ltd.'s proposed $350 million senior secured guaranteed notes due 2020 an expected rating of BB/RR1(EXP).

The notes will be jointly and severally guaranteed by all of Pacnet's main income-generating subsidiaries. Non-guaranteeing subsidiaries comprised 9% of assets and generated negative EBITDA in 2012.

Fitch said the rating reflects the difficult conditions that Pacnet continues to face in its key markets and Fitch's expectation that funds flow from operations-adjusted net leverage will be greater than 4 times for the next 18 months at least.

The ratings also incorporate Pacnet's relatively small operational scale, the lack of a cash generative local telecoms business, weak financial position, and strong competition from better capitalized market participants, the agency said.

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