Research Update: CommScope Holding Co. Inc. 'BB-' Rating Affirmed On ARRIS Acquisition; Outlook Negative; Debt Ratings On CreditWatch

Telecommunications equipment and components provider CommScope Holding Co. Inc. announced that it will acquire ARRIS International PLC for $7.4 billion including the repayment of ARRIS debt. We are affirming our 'BB-' issuer credit rating on the company and revising the outlook to negative from stable. We are also placing our issue-level ratings on the company's debt on CreditWatch with negative implications, which reflects the large increase in debt that we think is likely to weaken recovery prospects. The negative outlook reflects our view that the company will operate near the limits of the 'BB-' rating and that we could lower the rating if S&P Global Ratings' adjusted leverage remains above 5x on a sustained basis, likely the result of CommScope's

...+ Telecommunications equipment and components provider CommScope Holding Co. Inc. announced that it will acquire ARRIS International PLC for $7.4 billion including the repayment of ARRIS debt. + We are affirming our '##-' issuer credit rating on the company and revising the outlook to negative from stable. + We are also placing our issue-level ratings on the company's debt on CreditWatch with negative implications, which reflects the large increase in debt that we think is likely to weaken recovery prospects. + The negative outlook reflects our view that the company will operate near the limits of the '##-' rating and that we could lower the rating if S&P Global Ratings' adjusted leverage remains above 5x on a sustained basis, likely the result of CommScope's telecommunications customers reducing capital spending budgets due to a poor macroeconomic environment. A deviation from the company's policy of using cash flow for debt repayment or integration challenges could also result in a downgrade....

Research Update