The B3-rated credit facility of Alamosa Holdings has been placed on review for possible upgrade by Moody's Investors Service, following the company's launch of an exchange offer that would reduce Alamosa's debt burden. "A successful exchange, combined with expected amendments to Alamosa's PCS operating agreements with Sprint, will improve the company's financial flexibility," Moody's states. Alamosa is also relaxing financial covenants on its credit agreement.
If noteholders accept the exchange offer, the Lubbock, Texas-based Sprint PCS mobile phone service affiliate would reduce its debt by $240 million and reduce its interest expense by $20 million in 2004, growing to over $40 million when the discount notes turn cash-pay in 2006. The Sprint amendments would also save $15 million annually, Moody's adds. Moody's remains concerned, however, about the company's bank debt amortization requirements of $22.5 million in 2004 and $45 million in 2005, in which the company's cash flow must still grow to make the payments. Alamosa Holdings has a $200 million "B" loan and a $25 million revolver due 2008. Kendall Cowan, cfo, secretary and director at Alamosa, did not return calls.
*Fitch Ratings removed the Goodyear Tire & Rubber Company from negative ratings watch for its B+ rated senior secured debt following the ratification of a three-year contract by the United Steelworkers of America union on behalf of Goodyear's North American tire plant workers. "Forging a new contract with greater flexibility for cost reduction was crucial in Goodyear's plan to effect a turnaround in its struggling North American tire operations," Fitch states. However, Fitch adds that of equal or greater importance is Goodyear's plans to increase productivity and utilization, improvement in market share, rebuilding brands and pricing integrity and restoring distribution channels.
The new labor agreement further requires Goodyear to raise $325 million of new financing--$250 million of debt and $75 million of equity or equity-linked securities--by December of this year, as well as launch a refinancing of the U.S. bank facilities by December 2004. A Goodyear spokesman declined to comment.
Other Ratings Actions*
Booth Creek Ski Holdings
Removed From Credit Watch
On Review, Direction Uncertain
Downgraded From B+
*Thurs, Sept. 25 through Wed, Oct. 1