Moody's may downgrade Rural Cellular

Moody's Investors Service said it placed under review for possible downgrade Rural Cellular Corp.'s B3 corporate family and probability-of-default ratings, Ba3 (LGD1, 0%) $60 million senior secured bank facility due 2010, Ba3 (LGD2, 18%) $510 million 8¼% senior secured notes due 2012, B3 (LGD4, 57%) $325 million 9 7/8% senior unsecured notes due 2010, Caa2 (LGD5, 86%) $300 million 9¾% senior subordinated notes due 2010 and $175 million senior subordinated floating-rate notes due 2012, Caa2 (LGD6, 98%) 11 3/8% senior exchangeable preferred shares due 2010 and Caa2 (LGD 6, 100%) 12¼% junior exchangeable preferred shares due 2011.

The review has been prompted by Moody's concerns that Rural is unlikely to achieve sufficient operational progress within the next few years to meaningfully reduce its significant debt burden, measured by an adjusted debt-to-EBITDA ratio of roughly 8.5x, and the company's thin equity capitalization.

The review will focus on the company's plans, if any, to alter its capital structure given its significant leverage, Moody's expectations for the company to increase its cash flows by improving retail subscriber metrics, growing roaming revenues and maintaining currently low levels of capital expenditures, and any alternatives that Rural may consider to sustain or improve its liquidity position in the context of its covenant restrictions.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.