CEL Debt Restructuring
REMARK: This release follows a downgrade of CEL's
credit rating by S&P yesterday. (See 2nd story below.)
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Press Release Source: Grupo Iusacell, S.A. de C.V.
Iusacell Announces Intended Debt Restructuring Process
Wednesday November 6, 1:23 pm ET
MEXICO CITY, Nov. 6 /PRNewswire-FirstCall/ -- Grupo Iusacell,
S.A. de C.V. (NYSE: CEL - News; BMV: CEL) today announced
that it has initiated the process of evaluating different alternatives
for the purpose of restructuring its debt, including the selection of
advisors.
Management believes that as part of the re-engineering process to
refocus the Company on high-value customers, this is the
appropriate time to initiate the restructuring of its debt. Iusacell
continues to be in full compliance with all of its debt covenants.
The Company will communicate further information when more
specific data becomes available.
Grupo Iusacell, S.A. de C.V. (NYSE: CEL - News; BMV: CEL)
(Iusacell) is a wireless cellular and PCS service provider in seven
of Mexico's nine regions, including Mexico City, Guadalajara,
Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The
Company's service regions encompass a total of approximately 91
million POPs, representing approximately 90% of the country's
total population. Iusacell is under the management and operating
control of subsidiaries of Verizon Communications Inc. (NYSE: VZ
- News).
Investor Contacts:
Russell A. Olson
Chief Financial Officer
+011-5255-5109-5751
russell.olson@iusacell.com.mx
Carlos J. Moctezuma
Manager, Investor Relations
+011-5255-5109-5780
carlos.moctezuma@iusacell.com.mx
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S&P cuts Grupo Iusacell corporate credit ratings
Tuesday November 5, 12:09 pm ET
(The following statement was released by the rating agency)
NEW YORK, Nov 5 - Standard & Poor's Ratings Services said t
today that it lowered its foreign and local currency corporate credit
ratings on wireless cellular and PCS service provider Grupo
Iusacell S.A. de C.V. (Mexico:CELV.MX - News; NYSE:CEL -
News) and on subsidiary Grupo Iusacell Celular S.A. de C.V. to
triple-'C'-plus from single-'B'-plus. The ratings were placed on
CreditWatch with negative implications.
"The downgrade and CreditWatch placement reflect growing
concerns about Iusacell's liquidity and refinancing ability, in a time
of increased financial market volatility and uncertainty in the
telecommunications industry," stated Standard & Poor's credit
analyst Patricia Calvo.
The rating actions are also based on the company's continued loss
of market share and declining revenues, as well as uncertainty on
whether the company's strategy to increase revenues, cut costs,
and improve internal cash flow generation will be sustainable.
Mexico-based Iusacell has about $810 million in debt.
Standard & Poor's is concerned about Iusacell's operating and
financial measures, its liquidity, and the challenging business
environment that the company faces as a result of weak economic
conditions and increased competition. If cash flows do not improve
with the recent implemented measures aimed at retaining and
attracting higher-end postpaid and prepaid customers, Iusacell's
ratings will be lowered.
As of September 2002, Iusacell had a subscriber base of
2,176,478 users, a 1.2% decrease from the previous quarter due
in part to the removal of roughly 47,400 inactive customers.
Additionally, churn increased to 3.7% from 3.0% in the same
period. Although revenue has begun to stabilize during the third
quarter when compared to second quarter 2002, Iusacell's
revenue growth has slowed down significantly when compared
year-over-year.
As of September 2002, the company's revenues were $393
million, a 20.9% year-over-year decline due to adverse economic
conditions affecting overall usage, and a higher proportion of
prepaid and mixed users, resulting in lower average revenue per
user (ARPUs). Despite the announced reduction in the capital
expenditure budget from US$250 million to US$130 million for
2002 (US$20 million are expected to be rolled over to 2003),
Iusacell's internal cash flow generation might not be enough to
fund its operational and financial expenses, as well as its
investments.
Although Iusacell does not have significant debt maturities until
2004, liquidity is a concern. The company has about US$16
million in cash as of Oct. 24, 2002 (excluding the US$25 million in
escrow to pay its December 2002 coupon for its notes due 2006).
Free cash flow is expected to be negative because the company
intends to fund capital expenditures with internal generated funds
to maintain its growth plans. Given limited credit line availability
(US$5 million in vendor financing) and uncertainty on parental
support, Iusacell might not be able to meet its cash requirements.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis
system, at www.ratingsdirect.com. All ratings affected by this rating
action can be found on Standard & Poor's public Web site at
www2.standardandpoors.com; under Fixed Income in the left
navigation bar, select Credit Ratings Actions. |
