Moody's raises Spectrasite loan, rates notes B3

Moody's Investors Service assigned a B3 rating to SpectraSite, Inc.'s planned offering of $150 million senior notes due 2010 and upgraded the secured bank credit facility of SpectraSite Communications to B1 from B3. The outlook is stable.

Moody's said the new ratings reflect SpectraSite's improved financial profile upon its reorganization after seeking bankruptcy protection last year.

The improved financial profile due to the elimination of $1.7 billion of debt, as well as the lack of any required principal amortization under the secured credit facilities until the third quarter of 2005 (prior to application of the net proceeds from the pending senior notes issue which will push back amortization until the first quarter of 2006), is the primary basis for the upgrade.

The greatly reduced debt service burden, along with $87.9 million of cash at March 31, 2003, better positions the company to endure the current uncertain operating environment for independent tower operators.

However, the ratings are constrained by the contractual obligation of SpectraSite to purchase 600 more towers (at $260,000 per tower) from SBC Communications during the period beginning May 2003 through August 2004, Moody's said. This commitment will require approximately $156 million if all 600 towers are purchased, and are likely to make the company free cash flow negative until the second half of 2004.

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