Moody's Downgrades Exodus Communications
26 Jun 13:20
Following is a press release from Moody's Investors Service:
New York, June 26, 2001 -- Moody's Investors Service today lowered the senior
unsecured and issuer ratings of Exodus Communications, Inc. (Exodus) to Caa1
from B3. Moody's also lowered the company's senior secured rating to B2 from
B1, the senior implied rating to B3 from B2, and the convertible subordinated
debt rating to Caa2 from Caa1. All ratings have been placed on review for
possible further downgrade.
The ratings downgrade is prompted by Exodus' revised financial guidance which
has fallen short of Moody's earlier expectations. Moody's review for further
possible downgrade reflects our concern that Exodus' revised business model may
be still further impacted by the general economic slowdown.
On June 20, 2001, Exodus lowered its 2001 revenue guidance to $1.35 billion
from previous guidance of $2.0 - $2.3 billion on January 24, 2001. The company
also lowered its full year 2001 EBITDA estimate to $80 million from $300 - $350
million and gross margins to 23% from 29% - 32%. Exodus attributes the decline
in revenue to several factors including a decrease in the rate of new customer
installations, an increase in the rate of cancellations, a reduction of orders
from existing customers, and an increase in reserves related to dot-com
failures.
Moody's review will focus on Exodus' liquidity position and its ability to
achieve cash flow over the intermediate term sufficient to support the
company's capital needs and sizable debt load. According to the company's
latest projections, cash and liquid assets are expected to decline from
approximately $1.1 billion at the end of the first quarter to approximately
$200 million by year end 2001. In addition, Moody's believes that the public
debt or equity markets are closed to Exodus, given current market conditions.
The ratings downgraded and placed on review for possiblefurther downgrade
are:
Senior secured debt lowered to B2 from B1
Senior implied lowered to B3 from B2
Issuer rating lowered to Caa1 from B3
Senior notes lowered to Caa1 from B3;
11 1/4% US$275 million, due 2008
11 3/8% EUR200 million, due 2008
10 3/4% EUR125 million, due 2009
10 3/4% US$375 million, due 2009
11 5/8% US$1.0 billion, due 2010
Convertible subordinated notes lowered to Caa2 from Caa1;
5.0% US$72.2 million, due 2006
4 3/4% US$500 million, due 2008
5 1/4% US$500 million, due 2008
Exodus Communications, Inc. is based in Santa Clara, California.
(END) DOW JONES NEWS 06-26-01
01:20 PM |
