Moody’s rates SubCom loans B1

Moody’s Investors Service said it gave B1 ratings to the backed senior secured first-lien bank credit facilities consisting of a $175 million revolving credit facility and a $1.35 billion term loan that Crown Subsea Communications Holding, Inc.'s (SubCom) plans to borrow.

The agency concurrently affirmed SubCom’s B1 corporate family and probability of default ratings.

“The ratings affirmation follows SubCom's proposed issuance of a $1.35 billion first lien term loan which will be used along with cash from the balance sheet to refinance SubCom's existing debt and pay a dividend to shareholders. SubCom, which is owned by funds affiliated with private equity sponsor Cerberus Capital, has demonstrated a shareholder friendly financial strategy with a history of dividends funded through incremental debt and excess cash,” Moody’s said in a statement.

The agency said it forecasts SubCom’s pro forma Moody’s-adjusted debt/EBITDA will grow to the mid-4x area from mid-3x once the deal closes. However, “Moody's expects leverage to decrease below 4x over the next 12-18 months driven by organic revenue and EBITDA growth as SubCom benefits from strong demand and new contract wins.”

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