Comdisco's Sr Debt Rtg Lwrd To `BBB+' From `A-`; On Watch Neg By Fitch.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 3, 2000 Comdisco, Inc.'s (CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the ) senior debt rating is lowered to `BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +' from `A-` and the commercial paper rating has been affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. at `F2' by Fitch. Concurrent with this rating action, Fitch placed CDO's senior debt on Rating Watch Negative. Approximately $5.5 billion of debt securities are affected by Fitch's actions. The rating action follows the announcement by CDO this morning that the company will cease funding of Prism Communications Services. CDO acquired Prism in 1999 as part of its corporate strategy to accelerate the company's growth as a global provider of technology solutions. In addition, CDO plans to write-off its net carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. in Prism and sell all of the unit's equipment. Projected proceeds from equipment sales are not reflected in CDO's action today. While Fitch anticipated that Prism would report operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. , the losses have significantly exceeded expectations. Instead of maintaining a majority ownership in Prism and completing an initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ) in 2000 as originally planned, management engaged investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. in July 2000 to explore their strategic options. At Sept. 30, 2000, CDO's carrying value in Prism totaled $375 million. Positively, quarterly operating losses arising from Prism, which had recently been in the range of $42-65 million will cease. While Fitch recognizes the magnitude of this writedown to CDO's balance sheet and operating fundamentals, this action removes one of the concerns cited on Aug. 1, 2000 when the company's ratings were placed on Rating Outlook Negative. However, the writedown will result in a sharp increase in CDO's leverage, as defined as debt divided by equity less the tax effected unrealized equity gains. At Sept. 30, 2000, Fitch estimated that CDO's leverage, following the special charge, was over 7.00 times (x). Assuming the sale of the Prism equipment and the completion of the Ventures IPO coupled with good operating performance from the company's remaining businesses, leverage could decline to below 5.50x over the immediate term. The completion of these events, along with continued good operating results and subsequent reduction in leverage, will result in the removal of the Rating Watch Negative. Comdisco, Inc. is a worldwide company offering financial solutions that reduce technology cost and risk and offering services supporting technology infrastructure. CDO's businesses are Leasing, Technology Services, Ventures, and Prism. These businesses well-position CDO as a broad-range provider of information technology solutions and services. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide. |
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