Given the rating agencies' supercaution since E, not too bad:
S&P Assigns Quanta Svcs Inc. BB-/Stable Rtg
DOW JONES NEWSWIRES
The following is a press release from Standard & Poor's:
NEW YORK (Standard & Poor's) Oct. 30, 2003--Standard & Poor's Ratings Services said today that it assigned a 'BB-' corporate credit rating to Quanta Services Inc. (PWR). At the same time, Standard & Poor's assigned a 'BB-' to Quanta's proposed $200 million senior secured credit facilities, and a 'B' rating to the $270 million convertible subordinated debentures recently issued under SEC Rule 144A. Proceeds from these transactions are being used to refinance debt and to collateralize letters of credit. The rating outlook is stable.
Quanta provides specialized contracting services offering end-to-end network services to the electric power, gas, and telecom and cable industries. Headquartered in Houston, Texas, the company had total debt (including present value of operating leases) of $427 million at June 30, 2003.
"The ratings reflect Quanta's highly leveraged financial profile, aggressive financial policies, and fair liquidity, tempered by its leading positions in large, cyclical end markets," said Standard & Poor's credit analyst Heather Henyon. Because of declining telecom and cable market conditions and soft energy markets, Quanta has shifted its business focus from telecom and cable (21% of revenue in 2003, from 58% in 2000) to electric power and gas (62% of revenue in 2003, from 28% in 2000). Standard & Poor's expects limited growth in the energy infrastructure sector in the near term, although over time, gradual improvement should occur from transmission and distribution work and from outsourcing trends.
The bank loan facilities will be secured by all of the capital stock of Quanta's domestic subsidiaries (direct or indirect) and some of the capital stock of Quanta's foreign subsidiaries, as well as by all of Quanta's other present and future assets and properties. The revolving credit facility matures in 2007, while the term loan matures in 2008.
Leading market positions, an improving cost structure, and the expectation of free cash flow generation limit downside ratings risk. An aggressive financial profile and policies, and participation in markets with above-average risks constrain upside rating potential. |
