NEW YORK—Standard & Poor’s revised its outlook for SpectraSite Holdings Inc. to negative from stable due to the tower company’s dependence on external funding.
“The current economic environment increases the financial risk for all companies dependent on additional external capital to implement their business plans,” said Standard & Poor’s credit analyst Catherine Cosentino. “Coupled with SpectraSite’s relatively high ongoing leverage, this could cause the company’s credit profile to deteriorate if it falls short of planned levels of expansion in tenant contracts and network services.”
Standard & Poor’s said that although the tower leasing business is considered to have a sound business model, SpectraSite’s aggressive use of leverage to fund its tower expansion has contributed to near-term pressures on the company’s financial measures. Despite such weakness, the company derives flexibility from access to borrowings under its bank facility, which is expected to substantially fund its capital and operating requirements over the next few years.
SpectraSite also benefits from the loosened financial covenants obtained on the company’s bank loan in late 2001.
