Knology's $173 million repriced first-lien term loan broke at 100 5/8 in the secondary market last week. Two-hundred basis points were shaved off the Credit Suisse-led deal, which is now priced at LIBOR plus 2 1/2%. The credit also consists of a $95 million second lien priced at LIBOR plus 10%. The second lien was not repriced because it is not callable.
In a statement, the West Point, Ga.-based broadband network services provider said it had engaged Credit Suisse and Wachovia Securities to help it reprice its first-lien term loan following improved financial results. It posted EBITDA of $15.5 million for the first quarter, an increase of 58.4% compared to the same period a year ago. Its revenue increased to $62.7 million, a 14% increase compared to the same period in 2005.
Moody's Investors Service raised Knology's first lien rating to B1 from B3 and its second lien rating to Caa1 from Caa2. The upgrades reflect the company's more rapid than expected generation of free cash flow it posted $1.4 million free cash flow in the first quarter. According to the ratings agency, Knology's leverage fell to six times as of the end of 2005, compared to more than seven times in May 2005. Standard & Poor's assigned a B rating and 3 recovery rating to the first lien and a CCC+ rating and 5 recovery rating the second lien. The ratings reflect its vulnerable market position in a fiercely competitive cable industry and its small size, which limits its power to negotiate price, according to the ratings agency. Todd Holt, cfo, could not be reached.