Moody's rates Horizon PCS

Moody's Investors Service said it assigned a B3 rating to the pending issuance of $125 million of senior notes due 2012 by Horizon PCS Escrow Co. Moody's also assigned a B3 senior implied rating to Horizon PCS Inc. with a stable outlook and a speculative grade liquidity rating of SGL-3.

Moody's said the B3 senior implied rating reflects the weak competitive position of the company in its markets, and the inherent limitations of its affiliation agreement with Sprint (lack of spectrum and complete control over operations), bolstered by the improved financial profile of Horizon PCS upon its emergence from Chapter 11 bankruptcy protection. The reorganization will reduce total debt to $125 million from $550 million and debt per subscriber to around $650 from over $1,900.

Horizon PCS will also benefit from improved operating conditions due to the elimination of its network sharing arrangement with Ntelos, and lower per subscriber charges from Sprint. Nonetheless, Horizon PCS will be challenged to improve its subscriber growth, which has been negative since filing for bankruptcy protection last August.

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