Moody's rates Dobson Cellular notes B1

Moody's Investors Service said it assigned a B1 rating to Dobson Cellular Systems Inc.'s new senior secured notes, changed the speculative grade liquidity rating to SGL-2 from SGL-3 and affirmed all existing long term ratings of DCS, American Cellular Corp. and their parent company, Dobson Communications Corp., including Dobson's B3 corporate family rating.

The agency said the rating actions are prompted by the company's announcement that it will issue $250 million of 8 3/8% series B first-priority senior secured notes due 2011 to effectively refinance its existing $250 million of first-priority senior secured floating-rate notes also due in 2011. Following the transaction, Moody's expects the company's total amount of debt will remain unchanged.

The upgrade in the SGL rating reflects Moody's expectation that free cash flow is likely to remain positive and grow over time.

The ratings reflects Dobson's position as a relatively small rural and suburban cellular operator with a meaningful dependence on one of its contractual roaming relationships as well as a relatively recent history of soft operating performance, offset by Moody's expectations for improved results going forward.

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