S&P revises US Unwired to developing

Standard & Poor's said it revised its outlook on US Unwired Inc., an affiliate of Sprint PCS, to developing from negative.

Ratings on the company, including the CCC- corporate credit and bank loan rating and C subordinated debt rating, were affirmed.

S&P said the outlook revision is based on modest improvement of US Unwired's financial profile, stemming from the October credit agreement amendment and the receipt of roughly $40 million gross proceeds from noncore cellular and tower asset sales expected in the first quarter of 2004. After transaction expenses, 60% of the proceeds will be used to repay a portion of bank debt.

S&P said its previous concerns about potential near-term debt restructuring activities in light of likely bank technical defaults have been alleviated by the successful bank facility renegotiation and expected asset sales. Nevertheless, considerable uncertainty surrounds US Unwired's ability to withstand competitive pressure after wireless number portability becomes effective in May 2004 in the company's markets.

The company could be challenged to boost discretionary cash flow, particularly after cash interest becomes due on its discount notes in 2005, and could consume its modest covenant cushion.

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