NEW YORK-Calling completion of an exchange offer launched by Montreal-based Telesystem International Wireless Inc. July 6 “tantamount to default,” Standard & Poor’s Corp. said July 9 it had downgraded the company’s debt two notches to C, one step above default.
The ratings of TIW’s subsidiary, Dolphin Telecom plc, London, an enhanced specialized mobile radio carrier, are not affected by the exchange offer.
However, Dolphin’s debt rating of C remains on CreditWatch for possible downgrade “due to ongoing concerns about (its) ability to obtain additional funding in the short term, given its weak competitive position and difficult capital market conditions,” Standard & Poor’s said. The New York-based rating agency said it has similar concerns about the impact of Dolphin’s problems on the credit rating of its parent.
TIW plans to exchange up to $195 million in new senior notes due Dec. 30, 2003, and $50 million in cash for its $574 million in outstanding senior unsecured notes, bearing interest rates of 10.5 percent and 13.25 percent. The new bond issue would be secured by a lien on the capital stock of TIW’s Brazilian cellular operations and on the capital stock that TIW holds in Clearwave N.V.
“Standard & Poor’s would consider the completion of the exchange to be tantamount to a default since the total value of the proposed notes will be significantly less than the par (or face) value of the existing notes,” the rating agency said.
