S&P ups US Unwired

Standard & Poor's said it raised its corporate credit rating on US Unwired Inc. to CCC+ from CCC- and the subordinated debt rating to CCC- from C.

S&P said the upgrades are based on financial profile improvement from 3(a)(9) debt-for-equity exchanges, together with the company's recent offerings of $125 million senior secured first-priority floating-rate notes due 2010 and $233.4 million in senior secured second-priority notes due 2012. The CCC+ rating on the first-priority notes and the CCC- rating on the second-priority notes were affirmed.

The outlook is positive.

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

S&P said ratings on US Unwired reflect high financial risk from elevated debt levels caused by negative discretionary cash flow incurred during the company's wireless network construction and business start-up period, a weaker market position compared with more deeply entrenched competitors because of the company's late entry into its territories, intense wireless industry competition, and a potential negative liquidity impact from pending litigation between the company and Sprint PCS. Furthermore, asset recoveries in the event of a default or bankruptcy could be restrained because the company does not own the wireless spectrum licenses that it uses.

These factors are partly mitigated by US Unwired's growing wireless subscriber base and operating benefits from the Sprint PCS affiliation agreement.

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