CHICAGO-Duff & Phelps Credit Rating Co. assigned a BBB rating to Aerial Communications Inc.’s $100 million proposed offering of 10-year series B zero coupon notes.
The notes are unconditionally guaranteed by Aerial parent Telephone and Data Systems Inc.; the guarantee is a senior unsecured obligation of TDS. Proceeds from the note sale will be used to reduce Aerial’s vendor financing obligations under its equipment deal with Nokia Corp. Aerial operates broadband personal communications services networks.
TDS’ ratings recognize the credit improvement of its cellular subsidiary, the relatively lower level of competition faced by both the telephone and cellular units and TDS’ ongoing commitment to sustaining and eventually improving consolidated credit quality, said DCR. Conservatively financed acquisitions and network buildout have provided a relatively strong capital structure with which to support TDS’ high-growth needs.
TDS’ PCS investment requirements will peak in 1997 as commercial start-up costs are added to ongoing heavy and accelerated system buildout expenditures, said DCR. After this year, DCR expects credit measures to begin to rebound.
The company continues to evaluate alternatives to obtain equity funding in support of its PCS investments, including private and public equity sources, that would provide for additional financial cushion and flexibility at its current rating level, added DCR.
