Western Wireless Corp. is expected soon to privately sell $200 million in notes due 2007 to help finance its ongoing personal communications services buildout and to acquire additional spectrum in the latest Federal Communications Commission auctions.
Headquartered in Issaquah, Wash., Western Wireless owns and operates cellular and PCS licenses covering a population of about 25.5 million in the western United States. It had 270,000 subscribers as of June 30.
The debt securities are being offered under Securities and Exchange Commission Rule 144A, which waives registration and disclosure requirements that typically accompany a public sale of securities if they are sold only to institutional investors.
Within 30 days of the private debt sale, Western Wireless has agreed to register with the SEC for an offer to exchange the notes for new registered securities.
Moody’s Investors Service Inc., New York, accorded the pending note issuance a speculative grade rating of B3. It also confirmed its B3 rating on Western Wireless’ outstanding issue of $200 million in senior subordinated notes due 2006 that yield 10.5 percent.
“The ratings … reflect the risk associated with Western’s highly leveraged balance sheet, declining equity base as a result of losses and the likelihood that positive cash flows are still a few years away,” Moody’s said in a report by James Parrish, managing director, and Eric Goldstein, senior analyst.
For the first six months of this year, Western Wireless reported revenues of $105 million, cash flow of $9.8 million and a net loss of $40 million.
“In addition, the rating also recognizes that Western will face substantial competition in its markets from larger and (better) capitalized companies,” Moody’s said. “However, these concerns are balanced by Western’s established analog subscriber base and the opportunities presented to the company by the expanding market for wireless services.”
