S&P downgrades Rural Cellular

Standard & Poor's said it lowered the 11.38% senior exchangeable preferred stock of Rural Cellular Corp. (B-) to D from C following the company's announcement that it will not declare the quarterly dividends on the preferred stock payable in cash on Nov. 15 and Feb. 15.

The outlook is negative. Pro forma for a refinancing in November and related preferred stock dividend payments made at the time, the company has about $1.4 billion of total debt outstanding and about $600 million of preferred stock.

S&P said the ratings reflect the company's vulnerable business position as a small regional wireless provider competing against the national wireless carriers and other entrenched regional cellular carriers, coupled with the company's highly leveraged financial profile.

Rural Cellular has a debt to annualized EBITDA ratio of about 9.4x for the nine months ended Sept. 30, pro forma for the fourth quarter refinancing.

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