Telecommunications High Yield Weekly: Weekly Update

Research evidence excerpt

Telecommunications High Yield Weekly: Weekly Update

was 13.1x, 11.1x net. On the same basis but pro forma

for the data center sale with proceeds used to repurchase debt and the refinancing

of the 7.0% notes with new secured debt, we estimate total company leverage (all

secured) at roughly 9.2x, 7.3x net.

GCI – S&P downgraded unsecured debt rating to B+ from BB- and placed it on

CreditWatch Negative

• S&P downgraded GCI LLC’s unsecured debt rating to B+ from BB-, citing lower

recovery prospects for unsecured lenders as secured debt balances increase, and

placed the unsecured debt rating on CreditWatch Negative, which it said reflects the

potential for recovery prospects for unsecured lenders to deteriorate if the company

uses term loan proceeds to repay revolver as opposed to unsecured debt. It

affirmed the BB- issuer rating and stable outlook and assigned BB+ issue-level

ratings to GCI’s secured debt. (Recall, Moody’s rates the issuer and secured debt B1

and unsecured debt B3 with a positive outlook, while Fitch does not rate the credit).

S&P noted that GCI’s secured debt includes a $155 million delayed-draw term loan

A-1 due 2031, proceeds of which are earmarked to fund the Quintillion acquisition,

and $300 million term loan A-2 due 2031, proceeds of which are for general

corporate purposes, including GCI debt repayment. S&P noted that GCI did not

specify how much debt it would repay, but S&P expects most of the term loan A-2

proceeds to be used to repay unsecured debt. S&P said it will likely resolve the

CreditWatch once it has definitive information on the use of Term Loan A-2

proceeds

• Among other topics, S&P said it views the Quintillion acquisition favorably

because it improves the company’s network resiliency and reliability, and it expects