Research Update: CCI Buyer Inc. Ratings Affirmed On Announced Debt Add-On To Fund Dividend And Preferred Equity Purchase; Outlook Stable

U.S.-based mobile virtual network operator (MVNO) CCI Buyer Inc. (Consumer Cellular) plans to pay a $340 million dividend to its private-equity sponsor, GTCR LLC, using the proceeds from a tack-on $500 million senior secured first-lien term loan ($2.4 billion total). As part of the transaction, the company will pay down about $200 million of its perpetual preferred stock and extend the maturity of its revolving credit facility by one year to 2027. We expect adjusted leverage to decline to about 6x in 2024 from pro forma last-12-months leverage of about 6.9x as of Sept. 30, 2023. We assume margin benefits from a one-time boost in 2024 when its T-Mobile contract winds down while costs under its agreement with AT&T remain

...- U.S.-based mobile virtual network operator (MVNO) CCI Buyer Inc. (Consumer Cellular) plans to pay a $340 million dividend to its private-equity sponsor, GTCR LLC, using the proceeds from a tack-on $500 million senior secured first-lien term loan ($2.4 billion total). As part of the transaction, the company will pay down about $200 million of its perpetual preferred stock and extend the maturity of its revolving credit facility by one year to 2027. - We expect adjusted leverage to decline to about 6x in 2024 from pro forma last-12-months leverage of about 6.9x as of Sept. 30, 2023. We assume margin benefits from a one-time boost in 2024 when its T-Mobile contract winds down while costs under its agreement with AT&T remain fixed, with variable-cost terms starting in 2025 raising leverage to about 6.5x in 2025 but still within our 8x downgrade threshold for the rating. - We therefore affirmed our 'B-' issuer-credit rating on Consumer Cellular. - We also affirmed our 'B-' issue-level rating...

Research Update