Fitch assigns 1st-time ‘B+’ rating to Liberty Cablevision
Fitch Ratings has assigned a Long-Term Foreign Currency Issuer Default Ratings (IDRs) of ‘B+ to Liberty Cablevision of Puerto Rico LLC (LCPR). The Rating Outlook is Stable.
LCPR’s ratings reflect the company’s strong business position as the leading pay-TV and broadband services provider in Puerto Rico, Fitch said.
“The company has extensive network coverage and quality, and strong brand recognition. The ratings also incorporate the company’s improved scale and cash flow generation following the acquisition of Choice in 2015, and adequate liquidity,” Fitch added.
“The ratings are tempered by LCPR’s high leverage and its lack of service and geographical diversification, making it vulnerable to the weak macroeconomic conditions in Puerto Rico,” the ratings agency further noted.
LCPR is 60 percent owned by Liberty Global plc and 40 percent owned by Searchlight Capital Partners, and is a part of the LiLAC Group (LiLAC), which represents LG’s Latin America and Caribbean operations.
The company benefits from the strategic oversight by LG and its management expertise, as well as procurement and operating synergies from belonging to a larger operational group. LiLAC operating entities are separately capitalized and managed independently and LG maintains a group leverage target of 4.0x to 5.0x for its subsidiaries. LCPR’s leverage level is currently aligned with that target.
Fitch forecasts the company to maintain relatively stable leverage based on its operational fundamentals over the medium term, while any potential material improvement in the financial profile could be difficult as any significant deviation from the group’s financial target could be limited.
LCPR’s credit facility and its first-lien term loan are rated same as the company’s IDR, given their ‘RR4’ recovery ratings, which represent average recovery prospects in case of default, Fitch said.