Western Wireless Debt Downgraded

The debt ratings company, Standard & Poor's has lowered the corporate credit and secured bank loan ratings on Western Wireless Corp. to 'B-' from 'B' and the company's subordinated debt rating to 'CCC' from 'CCC+'. The downgrade reflects the impact of lower roaming yield and the anticipated GSM network buildout by national carriers on the company's future roaming revenue growth. It also reflects uncertainty related to the company's ability to meet increasing debt maturities commencing in 2003 and overall slower industry growth.

"The ratings remain on CreditWatch with negative implications," said Standard & Poor's credit analyst Rosemarie Kalinowski. "Under Standard & Poor's stressed scenario, slower revenue growth could result in the potential breach of an operating cash flow to pro forma debt bank covenant.

Bellevue, Wash.-based Western Wireless is one of the largest rural wireless carriers in the U.S., providing service to 1.2 million subscribers in 19 western states. As of Dec. 31, 2002, total domestic debt outstanding was about US$2.2 billion.

The company's ratings are based only on its domestic operations, as the company gives minimal financial support to unrestricted international subsidiary Western Wireless International Holding (WWI). In addition, WWI's credit facilities are non-recourse to Western Wireless. In 2002, Western Wireless invested about US$80 million in WWI and is expected to invest US$30 million to US$40 million in 2003."

Posted to the site on 7th April 2003