S&P cuts Tricom

Standard & Poor's downgraded Tricom SA including cutting its $200 million 11.375% notes due 2004 to CC from CCC+. The outlook is negative.

S&P said the downgrade reflects continued concerns regarding the company's ability or willingness to meet its coupon due Sept. 1.

Tricom has been affected by a number of factors: the acquisition and consolidation of the pay-TV operation (formalized in October 2001); costs associated with the new, advanced digital trunking services (iDEN) operation in Panama; and, more recently, as of March 31, 2003, the 36.4% year-over-year devaluation of the Dominican peso, S&P said.

For fiscal 2002, Tricom's EBITDA decreased by about 4.5%, causing EBITDA to cover gross interest expenses 1.2x compared with 2x for the corresponding period in fiscal 2001. As of first-quarter 2003, this trend persisted, with EBITDA decreasing by 20.4%, interest expense coverage decreasing to 1.1x from 1.5x the prior year, and its $473 million debt in relation to its last-12-month EBITDA deteriorating to 6.4x.

Tricom has filed a registration statement with the SEC for an exchange offer and consent solicitation for its $200 million, 11.375% senior notes due September 2004.

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