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Fitch rates American Cellular loan BB-, cuts note to B
Fitch Ratings said it assigned a BB- rating with a recovery rating of R1 to American Cellular Corp.'s $250 million senior secured credit facility, downgraded the company's $900 million senior unsecured notes to B/RR3 from B+/RR2 and affirmed its issuer default rating at B- $14.5 million senior subordinated notes at CCC+/RR5.
In addition, Fitch affirmed parent company Dobson Communications Corp.'s issuer default rating at B-; $150 million senior floating-rate notes, $160 million senior convertible debentures and $420 million senior notes at CCC+/RR5 and $136 million convertible preferred stock at CCC-/RR6.
Finally, Dobson Cellular Systems Inc.'s issuer default rating was affirmed at B- and its $75 million senior secured credit facility, $500 million first-priority secured notes and $325 million second-priority secured notes were affirmed at BB-/RR1.
The outlook is stable.
The agency said the ratings at Dobson reflect its current leverage, smaller scale as a regional operator and the competitive operating environment. Fitch also believes a higher level of event risk is present with potential universal service funding reform since universal service funding disbursements are a material percentage of total cash flow.
Positive offsets to these concerns include significantly improved operating metrics at Dobson primarily driven by the nearing completion of its GSM migration, Fitch added. Performance at American Cellular has improved from a year ago, but not to the extent of the consolidated results at Dobson.
The ratings for American Cellular's senior unsecured notes were downgraded by one notch to reflect the diminished recovery prospects, the agency said.
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