NEW YORK-Comcast Cellular Holdings Inc., a newly formed holding company, plans to sell privately $900 million in senior unsecured notes that will be used to help repay the outstanding debt of Comcast Cellular Communications Inc.
Comcast Cellular Communications, which has 762,000 subscribers in the mid-Atlantic region covering a population of 8.2 million, is the operating subsidiary of Comcast Cellular Corp. Comcast Cellular Holdings is to merge with Comcast Cellular Corp., with the latter remaining as the corporate entity.
Comcast Cellular Communications and Comcast Corp., a cable television operator headquartered in Philadelphia, each own part of Comcast Cellular Corp.’s outstanding debt. Proceeds of the new note issue will be used to redeem all of Comcast Cellular Corp.’s outstanding zero coupon bonds, which are held by Comcast Cellular Communications. Proceeds of the new note issue that finance outstanding Comcast Cellular Corp. debt held by Comcast Corp. will be exchanged for the new holding company’s preferred stock, which must be redeemed after the notes mature. Part of the proceeds also will be used to repay part of Comcast Cellular Communication’s borrowings from a bank credit facility.
Moody’s Investors Service Inc., New York, assigned a speculative grade B2 rating to the $900 million debt, based in part on its structural, or repayment, subordination to the bank credit facility. The rating agency also noted that personal communications services competition is imminent in Comcast’s service area. Nevertheless, it said it “maintains a positive outlook” on all Comcast Corp. and subsidiary debt ratings.
In a report by Neil Begley, senior analyst, and Robert Ray, managing director, both in its Media and Telecom Group, Moody’s said: “[The rating] also reflects the benefits derived from continued industrywide growth for wireless services, (Comcast Cellular Communications’) success in achieving high penetration rates, its continued growth in operating cash flow, the clustering of its properties around the greater Philadelphia/southern New Jersey metropolitan areas and the potential for reduced capital spending requirements after 1997.”
