NEW YORK-Moody’s Investors Service assigned a low-tier speculative grade rating of Caa1 to Telesystem International Wireless Inc.’s planned issue of $167 million in 10-year senior discount notes paying 10.5 percent interest.
Proceeds will be used to fund current operations and project development and for potential acquisitions.
Telesystem International has investments in cellular systems based on Global System for Mobile communications technology in the emerging markets of China, India and Romania. It also is part of a consortium that won the license to provide cellular service in the center-west region of Brazil.
Moody’s said it based its rating on the start-up status of these operations and their significant capital requirements, coupled with the fact that the new debt is subordinate in repayment priority to “significant secured debt at the operating project levels … and at the subsidiary holding company.”
Counterbalancing these concerns is the fact that Telesystem International has $360 million in equity and strong partners at the project level.
Additionally, the carrier’s operations are geographically diverse, and the GSM cellular markets it has entered are “vastly underserved and have a strong potential for commercial success,” said Tom Marshella, managing director, and Cyrille R. Conseil, assistant vice president, for the New York-based rating agency’s speculative grade ratings group.
Besides its cellular operations, Telesystem International also offers specialized wireless services in France, Germany, Spain and the United Kingdom. It is a paging carrier in Mexico and the Netherlands>
