Research Update: Connect Holding II LLC Assigned 'B-' Issuer Credit Rating; Outlook Negative; New Debt Rated

We expect Apollo Global Management Inc.'s acquisition of Lumen Technologies Inc.'s incumbent local exchange carrier assets and associated operations across 20 states in a transaction valued at $7.5 billion to close in October 2022, with $4.9 billion of proposed first-lien secured debt raised at the new carve-out entity, Connect Holding II LLC (doing business as Brightspeed). We assigned a 'B-' issuer credit rating to Brightspeed with a negative outlook. We also assigned a 'B-' issue-level rating and '3' recovery rating to the company's proposed first-lien senior secured debt, which comprises a $600 million revolving credit facility due in 2027, $1 billion term loan A due in 2029, $2 billion term loan B due in 2029, and $1.9 billion of senior

...- We expect Apollo Global Management Inc.'s acquisition of Lumen Technologies Inc.'s incumbent local exchange carrier assets and associated operations across 20 states in a transaction valued at $7.5 billion to close in October 2022, with $4.9 billion of proposed first-lien secured debt raised at the new carve-out entity, Connect Holding II LLC (doing business as Brightspeed). - We assigned a 'B-' issuer credit rating to Brightspeed with a negative outlook. - We also assigned a 'B-' issue-level rating and '3' recovery rating to the company's proposed first-lien senior secured debt, which comprises a $600 million revolving credit facility due in 2027, $1 billion term loan A due in 2029, $2 billion term loan B due in 2029, and $1.9 billion of senior notes due in 2029. The '3' recovery rating indicates our expectation of meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default. - The issue-level rating on the $1.4 billion, 7.995% senior unsecured notes due in...

Research Update