NEW YORK-Standard & Poor’s Corp. announced yesterday it had affirmed its speculative-grade CCC- ratings on $2.4 billion of outstanding debt issued by Nextel Communications Inc., Rutherford, N.J. The New York-based agency, which also affirmed Nextel’s CCC+ corporate rating, said the outlook on both ratings is stable.
In addition, Moody’s Investor’s Services confirmed its B3 rating on Nextel’s $1.126 million issue of senior redeemable discount notes due 2004 and $526 million of senior discount notes due 2003. It has upgraded to B3 from Caa the rating on $410 million of notes due 2004 that Nextel assumed in its acquisition of OneComm Corp. It also assigned a B1 rating to Nextel’s $1.55 billion senior secured bank facility due 2003. And it has assigned a stable rating outlook to all of the above.
Moody’s announced Sept. 6 that it planned to review Nextel’s ratings for possible downgrade (See story on Page 57). Ultimately, Moody’s did not downgrade Nextel debt. That announcement was made after RCR’s deadline on that page of the newspaper.
In affirming the ratings, Standard & Poor’s removed Nextel and Nextel’s debt from its CreditWatch, where it had placed the company in April 1995, following the announcement that Craig McCaw would invest up to $1.1 billion in Nextel.
This month, Nextel plans a full-scale commercial launch of its second-generation digital service in Atlanta, Boston, Chicago, Denver and Detroit. To support buildout of its network, Nextel will require an additional $1.7 billion in debt, of which about $1.5 billion is a bank credit facility expected to be completed by October, and the remainder is vendor financing, Standard & Poor’s said.
Cash flow is expected to remain negative at least through 1999, longer than previously anticipated, “because of delays caused by voice quality problems in 1995 and the first half of 1996, requiring a reconfiguration of Motorola’s iDEN technology,” the Standard & Poor’s announcement said.
