NEW YORK-McLeodUSA Inc., Cedar Rapids, Iowa, announced March 10 it plans to place privately a $200 million senior discount note issue due 2008.
Proceeds will help finance construction and operation of a personal communications services system and expand McLeodUSA’s intra-city fiber-optic networks, among other things, said the company.
Moody’s Investors Service Inc. and Standard & Poor’s Corp. gave the proposed issue speculative grade ratings of B2 and B+, respectively. The two New York-based rating agencies also upgraded McLeodUSA’s $725 million in outstanding debt to the same level as the new debt.
“With the proposed senior notes, we expect that the company has the funding it needs through 1999,” Moody’s said.
McLeodUSA is developing an integrated telecommunications services business, marketing local and long-distance, paging, Internet and other data services to small- and medium-sized businesses and residential customers. Focused on small- and mid-sized markets in the Midwestern, Great Plains and Rocky Mountain states, the carrier also holds PCS licenses and plans to provide wireless telephony services.
“The company’s strategy is to capture market share and generate revenues using leased facilities while expanding its network infrastructure. Standard & Poor’s expects that McLeod USA increasingly will migrate customers to its own networks as [its] subscriber base grows, enhancing profitability,” said the ratings firm.
