Standard & Poor's has assigned a B+ rating to Linc.net Inc.'s $230 million secured credit facility because of the financial constraints on the credit. Joel Levington, associate director at S&P, observed that the revolver is only $30 million. "Whereas before they had more flexibility for working capital and to pursue their business plan, they're somewhat limited today than they would've been with the old facility," he explained. "They were a different company when that facility was assigned. There were four acquisitions they had on their letters of intent, and due to lack of finance opportunities, they had to let those four acquisitions go." The new facility is indicative of what they could get from the credit markets, Levington said. Linc.net, based in Miami, Fla., provides a variety of network infrastructure services, including central office installation, network infrastructure engineering, and last-mile deployment. Daniel Harrington, cfo, did not return calls for comment.
The rating also notes that 82% of the sales are tied to outside projects, which makes the company somewhat weather dependent. "Obviously they're going to get more done in nice weather than when the weather is bad. They can obtain cash flow after the projects done," he said.
The rating is supported by what Levington described as "healthy industry fundamentals." He said there are positive factors that offset the cyclical nature of the industry. "The main drivers would be things like outsourcing by telecommunications and cable companies," he explained. Levington said many of these companies are looking into outsourcing their labor as unionized contracts come up and employees retire.