S&P cuts Williams Communications ahead of bond sale
July 25, 2000 05:02 PM
NEW YORK, July 25 (Reuters) - Standard & Poor's on Tuesday cut its ratings for fiber-optic network builder Williams Communications Group Inc. WCG , a day after the company's top shareholder said it will split in two, and as Williams Communications markets a $700 million bond sale.
The credit rating agency cut the Tulsa, Okla.-based company's corporate credit and bank loan ratings to "BB-minus," its third highest junk grade, from "BB."
It also cut the company's senior unsecured debt rating to "B-plus," its fourth highest junk grade, from "BB-minus." S&P rated the new bonds "B-plus," and said its ratings outlook is stable.
S&P said its cuts reflect Monday's announcement by Tulsa-based Williams Cos. WMB that its board agreed to separate into two companies, one focusing on its energy business and one on its communications business.
Williams owns 85 percent of Williams Communications, which has completed most of its 33,000 mile network to carry voice, data and other services.
S&P said that for rating purposes it will now treat Williams Communications as a stand-alone company, even though the split-up could take 18 months.
The agency said that before the board action, it had assumed that higher-rated Williams provided some support for Williams Communications' ratings.
The new ratings for Williams Communications, S&P said, reflect the company's strong fundamentals, success in building its fiber-optic network, significant financial flexibility and strong investor base, offset by the company's "significantly expanded capital spending plans."
Another rating agency, Moody's Investors Service, has not commented on the Williams board action. It rates Williams Communications' senior debt B2, roughly one notch lower than S&P's new rating.
Williams Communications is expected next week to sell dollar- and euro-denominated eight-year notes and dollar-denominated 10-year notes after a road show in Europe and the United States. Lehman Brothers Inc., Merrill Lynch Co. and Salomon Smith Barney are arranging the sale.
The company sold $2 billion of bonds to help finance its network expansion last Sept. 30. |
