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Technology Stocks : Covad Communications - COVD -- Ignore unavailable to you. Want to Upgrade?

To: Geoff Altman who wrote (1235)	9/20/2000 12:21:35 AM
From: BillyG	Respond to of 10485

Moody's assigns, affirms Covad <COVD.O> ratings Approximately $1.5 Billion of Debt Securities Affected (Press release provided by Moody's Investors Service) NEW YORK, Sept 19 - Moody's Investors Service has assigned a B3 rating to Covad Communications Group, Inc.'s proposed $500 million convertible senior notes, due 2005. Moody's has confirmed the existing B3 ratings on the company's $425 million of 12% senior notes due 2010, its $215 million of 12/1/2% senior notes due 2009, and its $138 million senior discount notes due 2008. Moody's has also confirmed the B3 senior implied rating and B3 unsecured issuer rating. The ratings recognize risks, which include those typical for a communications company in the early phase of its operations, including the rapid build-out of a national network. Additional risks include the continued development of demand from the end-user market; a dependency on third-parties to sell the service; and a focus on a single technology, which is not yet mature. The rating focuses also on certain strengths including strong experienced management, good access to capital, a good capital structure, and successful business execution to date. Moody's expects that the company will need to raise additional funding in the future in order to complete its significant network build-out program, moreover positive EBITDA is not anticipated in the intermediate term. However, the recently announced agreements with SBC Communications, including a $600 million resale revenue contract and a $150 million direct investment (representing an approximately 6% ownership interest) in Covad, provide some validation of Covad's business model by a leading telecommunications operator. The convertible senior notes are being sold in a privately negotiated transaction without registration under the Securities Act of 1933 (the "Act") under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. Reviewing the structural aspects of the proposed convertible notes, the issuer is a holding company and therefore the debt would be structurally subordinated to any debt issued by the operating companies. Also, in contrast to the existing senior notes, the convertible notes are not subject to financial covenants. Covad is headquartered in Santa Clara, California. 13:44 09-19-00