MUMBAI (Thomson Financial) - Moody's Investors Service revised its outlook
on Paetec Holding Corp to positive from stable after the company said it will
buy McLeodUSA Incorporated for 557 mln usd in stock and assumption of debt.
In addition, Paetec will repay McLeod's 104 mln usd outstanding senior
secured notes at closing, which Moody's expects to be done with a new debt
issuance, although the agency said Paetec has ample liquidity in the form of
cash and committed facilities to refinance the McLeod debt.
The ratings action reflects the enhancement of the combined company's
national footprint and the potential of McLeod's fiber rich network to drive
Paetec's cost structure down and provide a platform for greater product
diversity, Moody's said.
It is concerned however, that the integration of McLeod will shortly follow
Paetec's recent acquisition of US LEC, and that McLeod has a decent amount of
residential and small business lines that are disparate from Paetec's focus on
the higher end of the business telecom market.
Moody's also affirmed Paetec's ratings.
TFN.newsdesk@thomson.com
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