ALEXANDRIA, Minn.-The Securities and Exchange Commission declared effective Rural Cellular Corp.’s registration statement for a follow-on offering of 2.39 million shares of the company’s class A common stock to be offered to the public at $61.88 per share.
The underwriters of the issuance include Donaldson, Lufkin & Jenrette; Merrill Lynch & Co.; Banc of America Securities L.L.C.; First Union Securities Inc.; The Robinson-Humphrey Co.; and DLJdirect Inc. RCC granted the underwriters a 30-day option to purchase up to 358,500 additional shares of class A common stock to cover overallotments.
RCC also reported that the SEC declared effective the company’s registration statement for 140,000 shares of its 12.25-percent junior exchangeable preferred stock and 25,000 shares of its 11.375-percent senior exchangeable stock.
The junior stock is being offered at a price of $1,000 per share, while the senior stock is being offered at $988.88 per share. Both have a liquidation preference of $1,000 per share and are not convertible into common stock. This issuance is being underwritten by TD Securities Inc. and First Union Securities Inc.
According to RCC, the combined net proceeds from the offerings of approximately $299.5 million will be used, together with a new $1.2 billion credit facility and the issuance of $110 million in convertible preferred stock, to finance the pending acquisition of the licenses, operations and related assets of Triton Cellular Partners L.P., repay amounts owed under RCC’s existing credit facility, fund capital expenditures and for general corporate purposes.
Moody’s Investors Service assigned a “B1” rating to RCC for its $1.2 billion senior secured credit facilities, but assigned a “caa” rating to the pending $140 million issue of the company’s junior stock and to the $25 million add-on to RCC’s existing senior exchangeable preferred stock.
Moody’s said the ratings reflect the high leverage of the company after its acquisition of Triton Cellular, the highly competitive nature of the wireless industry and the risk that longer term, the company may not be able to continue to receive the same level of roaming revenues as it enjoys today.
