Dade Trims Debt; Nextel Finance Reaches Angel Status

Dade Behring's successful restructuring and significant debt reduction over the last five quarters has led Moody's Investors Service to upgrade the company's $125 million revolver and $290 million term loan to Ba3 from B1. In order to overcome bankruptcy and keep growing, Dade focused on maintaining the trust of its customers, developing new products, reducing its cost structure and making a commitment to raise revenues while aggressively decreasing debt levels, said John Duffey, Dade's cfo.

The clinical diagnosis service and instruments provider went into a pre-packaged bankruptcy in August 2002 and emerged that October. Dade's debt has fallen from $772 million in 2002 to $596 million over the past five quarters and Moody's expects debt will fall another $70 million in 2004. Bank debt has dropped from $450 million as of 2002 to $288 million as of February 2004. According to Moody's, the rating action acknowledges the relative stability of the company's cash flows. This is a result of significant customer and geographic diversification and recurrent income mainly from its sales of reagents and consumables.

* Nextel Communications' hold of the digital wireless service market with its services such as push-to-talk should enable the company to keep a step ahead of the competition. The expectation that Nextel will be able to maintain this competitive edge has led Standard & Poor's to raise the company's corporate credit rating to BB+ from BB- with a positive outlook.

The rating on Nextel Finance's bank loan, meanwhile, was raised to BBB from BB. The higher notching reflects S&P's improved assessment of subscriber value. Nextel Finance's fully drawn bank loan only represents about $415 per subscriber. The Cingular Wireless offer to acquire AT&T Wireless for $47 billion translates into a per subscriber value of about $2,100. "A potential default could arise if cash flow significantly deteriorates due to pressure on pricing and Nextel's subscriber base should competitors aggressively target Nextel's market niche," S&P adds.

But, "Even other wireless carriers have indicated publicly that they will not go after Nextel's customer base," said Michael Tsao an S&P analyst. Competitors that have either rolled out, or are planning to introduce push-to-talk, are unlikely to target Nextel's business and public sector subscriber base due to the dependence of this base on Nextel's exclusive network for access to critical users groups, the S&P report explains. Paul Blalock, v.p. of investor relations, said Nextel is pleased with the recognition.