Cincinnati Bell Inc. (CBB) announced that it is planning amendments to its credit terms with a bank ready to source a new $400 million Term Loan B Facility maturing 2020. The company expects to use this amount for repaying its 8 1/4% senior notes maturing 2017 and other corporate uses.
Cincinnati Bell’s short-term liquidity position, including $5.5 million of cash and cash equivalents and $192.0 million of undrawn credit facility remains a healthy financial base supporting its operations. The company also reduced its net debt position to $2.19 billion in the second quarter from $2.67 billion at the end of 2012. Further, with the formation of the new entity, CyrusOne, the company removed all debts of the former from its balance sheet.
We believe the company’s balance sheet strength stems from its strategy of offering attractively priced service bundles, including customized blends of local and long-distance phone service, broadband Internet access, and strength in wireless operations will enable it to satiate the growing demand. With a well-designed marketing program, plus well-known brand and strong reputation for offering high-quality service, the company is likely to add more market share.
We believe that Cincinnati Bell enjoys a comfortable market position owing to its distinguished brand name, attractively priced service bundles as well as proactive marketing and expansion strategies. Cincinnati’s Wireline segment remains the prime growth driver for the company based on its strong Fioptics business. New projects and the spin-off of CyrusOne into a separate entity are expected to work in favor of the company and aid earnings growth in the future.
Cincinnati Bell, which operates with other telecom companies like Frontier Communications Corp. (FTR), CenturyLink Inc. (CTL) and Windstream Corporation (WIN), currently has a Zacks Rank # 1 (Strong Buy).
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