Moody's rates Rural Cellular note add-on B2

Moody's Investors Service said it assigned a B2 rating to the $160 million of new 8¼% senior secured notes due 2012 to be issued by Rural Cellular Corp. and affirmed the company's B3 corporate family rating. The outlook is negative.

The ratings reflect Moody's opinion of the very weak financial profile of the company, with high leverage, poor free cash flow generating capacity and thin liquidity. In addition, the ratings reflect Rural Cellular's worsening position in its markets as the company is losing subscribers while the wireless industry continues to grow.

At Dec. 31, Rural Cellular had $1.4 billion of debt plus another $639 million of redeemable preferred stock, which yields leverage of over 9x 2005 EBITDA.

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