Cogent Communications Group Inc. on Monday announced a proposal to sell $150 million in senior secured notes.
Washington, D.C.-based Internet service provider Cogent revealed it planned to use the proceeds “for general corporate purposes and/or repurchases of Cogent’s common stock or its convertible notes or a special dividend to Cogent’s stockholders."
Cogent said it planned to sell the notes, due in 2018, to qualified institutional buyers in a private placement.
In a report today, Moody’s Investors Service “assigned a Caa1 corporate family rating (CFR) and a Caa1 probability of default rating (PDR) to Cogent Communications, LLC."
Moody’s defines corporate family ratings as “opinions of a corporate family’s ability to honor all of its financial obligations." Moody’s defines a PDR as “a corporate family-level opinion of the relative likelihood that any entity within a corporate family will default on one or more of its debt obligations."
“Cogent’s Caa1 corporate family rating reflects its high leverage, small scale and the highly competitive environment in which it operates, a well as the capital intensity of the industry," Moody’s stated.
Moody’s also assigned a rating of B2 to Cogent’s proposed debt offering. Moody’s assigns a B rating to obligations that “are considered speculative and are subject to high credit risk."
Cogent sells Internet access and other IP services to small and medium-sized businesses, communications providers and other organizations that require large amounts of bandwidth in Europe and North America.
Shares of Cogent (CCOI) were trading this morning at $13.83 on the Nasdaq.
For the nine months ending Sept. 30, 2010, the company posted service revenues of nearly $194 million. The company served roughly 24,000 customer connections as of Sept. 30.