S&P affirms FirstLight Fiber, revises recovery rating

S&P said it affirmed its B- issue-level rating on OHCP Northeastern Fiber Buyer Inc.'s (FirstLight Fiber) first-lien term loan due 2025 and revised the recovery rating to 4 from 3 following the company's proposed $80 million add-on to the facility (for a total of $455 million outstanding).

The 4 recovery rating indicates an expectation for average (30%-50%; rounded estimate: 45%) recovery of principal and interest for first-lien lenders in the event of a payment default.

At the same time, S&P affirmed its CCC issue-level rating on the company's second-lien debt following FirstLight Fiber's proposed $10 million add-on to its second-lien term loan due 2026 ($100 million total). The 6 recovery rating remains unchanged, indicating an expectation for negligible (0%-10%; rounded estimate: 0%) recovery of principal and interest for second-lien lenders in the event of a payment default.

“We expect FirstLight Fiber's adjusted debt to EBITDA to decline to the 7x area in 2020 from about 8.5x pro forma for the acquisition on earnings growth supported by its recent contract wins and the favorable demand characteristics in the fiber transport industry,” S&P said in a news release.

“Still, any longer-term improvement in the company's leverage is constrained by its private-equity sponsors and the potential for elevated capital expenditure or debt-financed acquisitions and dividends.”

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