NEW YORK (Standard & Poor's) Nov. 29, 2011--Standard & Poor's Ratings Services said today that its ratings and outlook on Mobile, Ala.-based prison phone provider Global Tel*LinkCorp. (B/Stable/--) are not affected by the increase in the company's proposed term loan to $635 million from $605 million. The 'B' issue-level rating and '3' recovery rating on the term loan and $50 million revolving credit facility remain unchanged. The company intends to use the proceeds from this term loan, along with $389 million of common equity, to fund the buyout of the company's owners Veritas Capital and Goldman Sachs Direct and its affiliates by American Securities LLC. Pro forma for the transaction and including our adjustments for operating leases, we expect leverage to increase to about 6.2x for the 12 months ended Sept. 30, 2011 from the current 5.3x, which is still within the parameters of the current rating. We expect adjusted leverage to improve to around 5.0x by the end of 2012 following a full year's contribution from inmate telephone service provider Value-Added Communications (VAC) (acquired in August 2011) and from achievement of some additional cost savings throughout 2012. We also expect leverage to further improve to the high- to mid-4x area thereafter with the full-year benefits of synergies achieved in 2012, which we have conservatively assumed will be about $10 million, or roughly 50% of those targeted but not yet realized. The 'B' corporate credit rating and stable outlook on the company remain unchanged. (For the complete corporate credit rating rationale, see the research update on Global Tel*Link, published Nov. 11, 2011, on RatingsDirect on the Global Credit Portal.) RELATED CRITERIA AND RESEARCH
-- Industry Report Card: U.S. Telecom And Cable TV Ratings Likely To Be Generally Stable During Slow Recovery, Oct. 13, 2011
-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
-- Timeliness Of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings, Dec. 23, 2010 RATINGS LIST Global Tel*Link Corp. Corporate Credit Rating B/Stable/-- Senior Secured $635 mil term loan B
Recovery Rating 3 $50 mil revolver B
Recovery Rating 3 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Primary Credit Analyst: Catherine Cosentino, New York (1) 212-438-7828;
catherine_cosentino@standardandpoors.com Secondary Contact: Allyn Arden, New York (1) 212-438-7832;
allyn_arden@standardandpoors.com
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