S&P may lower Windstream on NuVox buy

Wed. November 04, 2009; Posted: 03:32 PM

Nov 04, 2009 (M2 PRESSWIRE via COMTEX) -- WIN | Quote | Chart | News | PowerRating -- 4 November 2009 - S&P on Tuesday placed on "negative" watch its ratings on US local exchange carrier Windstream Corp's (NYSE:WIN) on its plans to acquire peer NuVox in a deal valued at USD643m (EUR438m).

Windstream said earlier it had reached a final agreement to buy NuVox tapping cash on hand and its USD500m senior secured revolver to fund the transaction.

The deal is pending regulatory approval and is likely to close in the first half of 2010, adding some 90,000 business customers in 16 states in the Southeast and Midwest to Windstream's service area.

The acquisition will further weaken Windstream's overall business risk profile, given its already heightened leverage of about 3.6 times, thus piling more downside pressure on its current BB+ corporate credit rating, the agency said.

Furthermore, the transaction will strain the buyer's liquidity by reducing its revolver availability and cash balance.

Integration risk is another concern magnified by Windstream's recently announced acquisitions of rivals Lexcom and D&E Communications (NASDAQ:DECC), the analysts said.

The rating service will assess the operating trends for Windstream and management's commitment to debt reduction in light of these pending acquisitions and either cut by up to one step, or affirm the company.

Comments on this story may be sent to admin@m2.com

For full details on Windstream Corp (WIN) click here. Windstream Corp (WIN) has Short Term PowerRatings of 5. Details on Windstream Corp (WIN) Short Term PowerRatings is available at This Link.

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