NEW YORK-Cellular Communications International Inc., New York, plans to retire outstanding senior discount notes paying 13.25-percent interest and replace them with a private placement of about $225 million in new debt due 2005.
Cellular Communications is a holding company whose only asset is its 10.3percent indirect interest in Omnitel-Pronto Italia, one of two Global System for Mobile communications carriers in Italy. Omnitel-Pronto had 2.4 million subscribers as of Dec. 31. It has a 30-percent share of the GSM market and a 21-percent share of the total cellular market in Italy.
Moody’s Investors Service, New York, accorded a speculative grade rating of Caa1 to part of the planned issuance, $75 million in subordinated convertible notes. To the remainder-senior discount notes denominated in European currency units-the rating agency accorded a higher speculative grade rating of B2.
Moody’s expressed concern about Cellular Communications because of various limitations on its financial and debt repayment flexibility: its status as a non-diversified holding company; constraints imposed by terms of its bank credit facility; and the subordination of repayment priority for its new debt to outstanding debt at Omnitel-Pronto.
“However, the ratings also reflect recognition that … [Omnitel-Pronto] has achieved tremendous improvements and growth in total subscribers, penetration, cash-flow generation and market share since it started commercial operations in late 1995,” said Pamela M. Stump, senior vice president, and Cyrille R. Conseil, senior analyst, for Moody’s speculative grade ratings group.
The ratings also reflect Omnitel-Pronto’s “highly experienced equity partners, which include Olivetti, Mannesmann Mobilfunk GmbH, Bell Atlantic Corp., AirTouch Communications Inc. and Telia Mobitel AB.”
