S&P: US Unwired on positive watch

Standard & Poor's said it placed its CCC- corporate credit rating for US Unwired Inc. on CreditWatch with positive implications. The C subordinated debt rating was also placed on CreditWatch with positive implications.

This action is based on financial profile improvement that will result following debt-for-equity exchanges, together with a proposed refinancing to repay the company's bank credit facility and purchase 13.375% senior subordinated discount notes tendered in response to the company's cash tender offer for all of the notes.

The exchange agreements will reduce discount note principal outstanding by $75 million face amount, or about $70 million in accreted value. The CreditWatch placement also reflects recent operating improvement, including better customer retention and cash flow growth.

Upon completion of the refinancing, S&P said it will raise the corporate credit rating to CCC+ with a positive outlook. The rating on any remaining 13.375% subordinated debt (estimated at $89 million) will be raised to CCC- from C.

At the same time, a CCC+ rating was assigned to US Unwired's proposed $125 million first-priority senior secured floating-rate notes due 2010. A CCC- rating was assigned to the $160 million second-priority senior secured notes due 2012.

Proceeds will be used to repay all of the existing credit facility and about $229 million face amount of the existing 13.375% senior subordinated discount notes. The rating on the bank facility has not been placed on CreditWatch and will be withdrawn upon repayment.

The CC corporate credit rating and C senior unsecured debt rating on IWO Holdings Inc., a wholly owned subsidiary of US Unwired, are affirmed.

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