NEW YORK-Standard & Poors warned of a possible downgrade on its rating of financially struggling Paging Network Inc., while Moody’s went ahead and lowered its ratings on the company’s debt issues.
S&P placed it ratings on PageNet on CreditWatch with negative implications, pointing to concerns over the company’s near-term liquidity. PageNet has about $1.8 billion in debt as of June 30.
“PageNet’s weakened financial profile has come about as the company has used significant cash in reshaping its business,” said an S&P report. “The costs of this initiative, together with the marketing, development and other start-up costs associated with the company’s advanced two-way messaging network, weakened (cash flow) to about 1.6 times for the first six months of 1999.”
S&P ratings remained the same-B+ on its corporate credit rating, B- on its subordinated debt and B+ on its bank loan.
Moody’s, however, cut its ratings on PageNet’s three subordinated debt issues to Caa1, from B3. Moody’s also downgraded to B1 PageNet’s $1 billion secured credit facility, and to B2 its senior implied rating. The outlook for all remain negative, the company said.
“This ratings action is prompted by Moody’s concern that PageNet continues to experience difficulties in stabilizing its traditional paging business,” said Moody’s. “In Moody’s opinion, the lower ratings are more consistent with the expected deterioration in financial performance due to the continuing difficulties in PageNet’s core paging business.”
The company’s stock closed at an all-time low of 84 cents Friday, having dipped as low as 75 cents at one point.
Analysts don’t see
PageNet finishing its reorganization until the first quarter of next year.
“We need to see the fruit of this labor,” said one industry analyst who wished to remain anonymous. “PageNet has to show some glimmer of hope” before investors regain confidence in it.
In recent months, the company has been decidedly quiet. Those following the company await the launch of both its information services platform and the introduction of full interactive two-way paging services, both of which were expected in early summer.
