CHICAGO - (Business Wire) Fitch Ratings has upgraded and removed from Rating Watch Positive the issuer default rating (IDR) and long-term debt ratings of Rural Cellular Corporation (Rural) to recognize the guarantees executed by Verizon Communications, Inc. (Verizon) following Verizon Wireless' announcement that it had completed the acquisition of Rural on Aug. 7, 2008:
--Long-Term IDR to 'A+' from 'CCC';
--$510 million secured notes (second lien) due 2012 to 'A+' from 'B-/RR2';
--$325 million senior unsecured notes due 2010 to 'A+' from 'CCC-/RR5';
--$175 million senior subordinated notes due 2012 to 'A' from 'CC/RR6';
--$425 million senior subordinated notes due 2013 to 'A' from 'CC/RR6'.
Rural's ratings had been placed on Rating Watch Positive on July 30, 2007.
To conform to the current rating status of Verizon, Rural's IDR and security ratings have been placed on Rating Watch Negative. The long-term ratings of Verizon and its affiliates were placed on Rating Watch Negative on June 5, 2008 due to Verizon Wireless' proposed acquisition of Alltel Corporation for an aggregate consideration of $28.1 billion. The acquisition of Alltel reflects equity consideration of $5.9 billion and Alltel's $22.2 billion of net debt expected at the time of the transaction's targeted completion at the end of 2008. Fitch believes, pending final review of the Alltel transaction, that a downgrade, if necessary, would be limited to one notch.
The upgrade of Rural's IDR and debt ratings reflects Verizon's full and unconditional guarantees executed on Rural's obligations under the respective indentures of the guaranteed securities. The guarantees are irrevocable unless and until the securities are otherwise redeemed, repaid, or defeased under the terms of the guarantees. The second-lien notes and the senior unsecured notes are guaranteed by Verizon on a senior basis; the senior subordinated notes are guaranteed on a senior subordinated basis.
Fitch expects to withdraw the ratings on Rural approximately 30 days after Verizon Wireless closes on its acquisition of Rural, as the debt is expected to be retired and no further public debt issuances by Rural are expected.
Fitch is also withdrawing the following ratings on Rural's bank credit facility and preferred stock:
--$60 million first lien credit facility rated 'B/RR1';
--12.25% junior exchangeable preferred stock rated 'C/RR6'.
At the close of the transaction, Verizon Wireless repaid the credit facility - which had $58 million outstanding on June 30, 2008 - and called the preferred stock for redemption.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
John Culver, CFA, +1-312-368-3216 (Chicago)
Bill Densmore, +1-312-368-3125 (Chicago)
Cindy Stoller, +1-212 908 0526
(Media Relations, New York)
