NEW YORK-Aliant Communications Inc. said it will use part of the proceeds of a recently completed public debt issue to pay for its purchase of a 50-percent stake in Omaha Cellular General Partnership, which it will then own completely.
Aliant, formerly known as Lincoln Telecommunications Co., closed a $100 million issue of 30-year notes paying 6.75 percent interest in a sale underwritten by Merrill Lynch & Co. and Morgan Stanley Dean Witter, both based in New York.
An incumbent local exchange carrier, Aliant diversified into cellular telephony during the mid-1980s. Aliant’s cellular footprint covers Nebraska and extends into western Iowa. The carrier has about 267,000 cellular subscribers, who accounted for approximately 26 percent of its revenues last year.
“Over the past several years, it acquired control of several (cellular) partnerships it manages, and [we] believe similar transactions are possible, as well as wireless footprint extensions into contiguous states,” said Stephen Gutkowski and Robert G. Konefal, senior vice presidents in Moody’s Investors Service corporate finance group, New York.
The latest sale is part of a $250 million shelf registration for public debt issuance that Aliant filed earlier this year with the Securities and Exchange Commission. Moody’s accorded the entire $250 million an investment grade rating of A2.
“Aliant has competed well in wireless, where its primary cellular competition is Western Wireless (Corp.). Its 16 percent penetration level for its owned and managed systems is well above industry norms,” Moody’s said.
“Wireless competition will increase as Sprint (Spectrum L.P.) and AT&T Wireless (Services Inc.) will ultimately offer [personal communications services] in some of Aliant’s wireless markets.”
Aliant said it will use $15 million of $100 million debt issue just sold to repay short-term debt it incurred to fund the previously announced acquisition of the remaining interest in Omaha Cellular that it did not already own.
Aliant also will use proceeds of the new issue to redeem approximately $48 million in outstanding debt carrying a 9.91 percent interest rate, to repay $31 million of a bank credit facility and to redeem about $4.7 million in outstanding preferred stock.
Aliant Communications is a diversified communications company providing bundled wireline and wireless services, primarily to consumers but also to businesses, educational institutions and government agencies.
