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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Related Issuers
Rating Action:

Moody's affirms WOW at B2; rates new credit facility B2

06 Jun 2017

New York, June 06, 2017 -- Moody's Investors Service, ("Moody's") has affirmed the B2 corporate family rating ("CFR") of WideOpenWest Finance, LLC ("WOW" or "the company") and assigned a B2 (LGD 4) rating to WOW's proposed senior secured first lien credit facility, which consists of a $2.335 billion term loan and a $200 million revolver (that increases by $100 million to $300 million under certain conditions, primarily the close of funding of the $2.335 billion term loan). WOW will use the proceeds from the term loan, together with cash from the balance sheet and a $105 million draw under the revolver, to refinance its existing term loan facility, fully redeem its 10.25% senior unsecured notes due 2019, and pay other transaction related fees and expenses. As the repayment of this unsecured debt eliminates all debt ranked junior to the proposed senior credit facility, the reduced structural loss absorption results in a one notch downgrade to WOW's senior secured credit facility instrument rating to B2, in line with the company's CFR. Moody's has also affirmed the company's B2-PD probability of default rating. The outlook remains stable.

Assignments:

..Issuer: WideOpenWest Finance, LLC

....Senior Secured Bank Credit Facility, Assigned B2 (LGD 4)

Outlook Actions:

..Issuer: WideOpenWest Finance, LLC

....Outlook, Remains Stable

Affirmations:

..Issuer: WideOpenWest Finance, LLC

.... Probability of Default Rating, Affirmed B2-PD

.... Corporate Family Rating , Affirmed B2

RATINGS RATIONALE

WOW's strong base of network assets, scale and profitability support its B2 CFR. As a result of management's focus on higher margin products and cost reduction, margins have expanded to be in line with the industry average leading to steady improvements in leverage. Proceeds from this financing, along with net proceeds from the company's recent initial public offering ("IPO") of equity shares, will reduce total debt by about $325 million and better solidify its positioning in the B2 rating category. Moody's estimates gross leverage (Moody's adjusted) will be 5.4x for LTM 2Q17, with leverage continuing to fall steadily through FYE2017. Moody's expects slightly negative free cash flow for FYE2017 despite sizable interest cost savings from the refinancing. WOW continues to invest in edge-out expansions across its footprint which strains free cash flow. EBITDA margins expanded year-over-year for 1Q17, but revenue growth has been only modest due to negative video subscriber trends and competitive pressures. After a temporary period of weakness in early 2015, WOW is executing on high speed data ("HSD") subscriber growth with six consecutive quarters of positive net adds. As the US cable industry grapples with a changing video distribution model, high content costs and weak video subscriber trends, the high margin HSD product is critically important for cable companies' cash flow growth. The maturity of the core video product limits growth potential, but Moody's believes WOW's HSD and commercial business product offerings will fuel EBITDA growth, supported by its high quality network spanning a ten state footprint. A meaningful reduction in interest expense, capital efficiencies and operating synergies create the potential for both stable and increasing free cash flow generation and lower leverage over the next several years, barring a change in current financial policy targets.

Moody's expects WOW to maintain good liquidity over the next 12 to 18 months. Pro-forma for the transaction, Moody's estimates that the company has available cash balances of $77 million as of March 31, 2017. WOW is expected to have about $195 million available under a revolving credit facility expected to be expanded to $300 million from $200 million once the proposed term loan is funded.

The stable outlook reflects WOW's improved credit profile, which is primarily due to solid execution with cost savings initiatives and the use of recent IPO proceeds for meaningful debt reduction. The stable outlook also reflects Moody's expectations that the company will maintain market share, especially for HSD subscribers, and that leverage will continue to decline at a steady pace.

Moody's would consider an upgrade of the B2 CFR if leverage was sustained around 5.0x (Moody's adjusted), free cash flow as a percentage of debt was in the mid to high single digits on a sustained basis, and there was evidence of maintaining its competitive position. Moody's would consider a downgrade of the B2 CFR if leverage were sustained above 6.5x (Moody's adjusted), liquidity were to become strained, or there was a weakening of subscriber trends.

The principal methodology used in these ratings was Global Pay Television - Cable and Direct-to-Home Satellite Operators published in January 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

With its headquarters in Englewood, Colorado, WideOpenWest Finance, LLC provides residential and commercial video, high speed data, and telephony services to Midwestern and Southeastern markets in the United States. The company reported 474,000 video, 729,000 high speed data, and 243,000 phone subscribers as of March 31, 2017. Avista Capital Partners owns 45% of the company and Crestview Partners owns 30%, with public shareholders owning the remaining 25%. Revenue for the last twelve months ended March 31, 2017 was approximately $1.2 billion.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Neil Mack, CFA
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

John Diaz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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