CHICAGO, July 27 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has raised the senior note rating of 360 Communications Company (360) from 'BBB-' (Triple-B-Minus) to 'BBB+' (Triple-B-Plus). 360's rating will remain on Rating Watch -- Up until its new parent company, ALLTEL Corporation, determines whether it will keep the notes outstanding, and, if so, whether it will provide explicit support for current noteholders.
The upgrade reflects the reduction in 360's debt leverage that has occurred since the closing of the merger on July 1, 1998. At closing, ALLTEL paid down the total amount of outstanding 360 bank debt (approximately $500 million) and terminated the facility, using draw downs from its own bank facility. However, ALLTEL has not guaranteed or assumed the remaining $1.3 billion of 360 debt and is currently evaluating its options in this regard.
In addition to the direct impact of debt reductions, the upgrade and the Rating Watch -- Up status recognize the implicit level of support 360 receives from ALLTEL, the strategic importance of 360's business to ALLTEL, and the potential for further improvement in credit quality should ALLTEL decide to refinance, guarantee or otherwise support 360's debt. 360 will benefit from greater scale and coverage, a fuller complement of vertical telecom services and improved access to capital.
In addition, 360 will be fully integrated into ALLTEL and will be crucial to its market expansion plans. Specifically, 360's wireless business will be combined with ALLTEL's local, long distance, and Internet services, while 360's geographic presence and local sales channels will provide a platform to extend ALLTEL's reach for competitive local exchange services.
Although it would be difficult to continue separate asset claims in this environment, the possibility remains that ALLTEL could renegotiate certain indenture terms while not explicitly assuming 360's remaining obligations. The potential for this scenario places practical limits on the level of credit quality DCR can accord to its new affiliation with ALLTEL at this time.
360 Communications Company became a wholly owned subsidiary of ALLTEL Corporation on July 1, 1998. 360 provides wireless services to 2.7 million customers in more than 100 markets in 15 states across the United States. The company also resells residential long distance and paging services.
SOURCE Duff & Phelps Credit Rating Co. -0- 07/27/98
/CONTACT: Michael P. Coutre, CFA, 312-368-3164, or e-mail coutre@dcrco.com, or Michael L. Weaver, 312-368-3156, or e-mail weaver@dcrco.com, both of Duff & Phelps/
(DCR XO) CO: 360 Communications Company; ALLTEL Corporation ST: New York IN: FIN TLS SU: RTG NS -- NYM107 -- 6728 07/27/98 16:44 EDT http://www.prnewswire.com
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