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DUFF & PHELPS REAFFIRMS THE RATINGS OF AMERICAN TELEPHONE AND TELEGRAPH COMPANY, AT&T CAPITAL CORPORATION, AND AT&T CREDIT CORPORATION

 CHICAGO, Aug. 17 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the ratings of the securities of American Telephone and Telegraph Company (AT&T), AT&T Credit Corporation, and the guaranteed debt of AT&T Capital Corporation. The senior long-term debt of AT&T, AT&T Credit, and the guaranteed debt of AT&T Capital are all rated 'AA+' (Double-A-Plus). Additionally, the commercial paper rating of AT&T is reaffirmed at Duff 1+ (One-Plus). The long-term debt and commercial paper ratings of the new AT&T Capital (no longer guaranteed by AT&T) have also been reaffirmed, at 'A' (Single-A) and Duff 1, respectively.
 This action has been taken in recognition of AT&T's announcement that it has signed a definitive merger agreement with McCaw Cellular Communications, Inc. for a stock for stock exchange valued at approximately $12.6 billion. The decision to merge came as a result of discussions following last November's announcement that AT&T would purchase a one-third interest in McCaw for $3.8 billion. Critical factors in the reaffirmation include the use of equity to finance the merger, AT&T's ability to refinance McCaw's $4.9 billion in debt at substantially lower rates, AT&T's commitment to use its substantial free cash flow to pay down debt, and the rapid improvements anticipated in earnings and cash flow from McCaw. Because McCaw's cellular systems are not yet fully developed, AT&T's pretax interest coverage following closing will be initially lower than was anticipated absent the merger. However, interest coverage following closing is expected to remain at or above levels achieved in recent years and within an appropriate range for a company with the earnings and cash flow stability exhibited by AT&T. As AT&T's internal cash allows reduction of its total debt, pretax interest coverage is expected to grow significantly.
 AT&T's ability to generate cash flow beyond its needs for capital expenditures is a critical rating factor. At the end of 1992, AT&T's debt ratio excluding financial services was 25 percent, down sharply from 38 percent at the end of 1990. Another important factor is the steps that AT&T has taken to insulate itself from the credit risk of its financial services operations. AT&T no longer guarantees the debt issuances of the new AT&T Capital, and earlier this year reduced its stake in AT&T Capital to 85 percent through a public offering.
 AT&T is the largest telecommunications company in the U.S., with 1992 gross revenues of $65 billion. The company is the largest provider of long distance services in the U.S. and a major manufacturer of telephone switching systems, transmission equipment, and premises equipment. AT&T's NCR subsidiary sells computer products. AT&T Capital offers a range of financing and leasing services. AT&T Credit is a subsidiary of AT&T Capital. AT&T's Universal Card has grown rapidly and is now the second largest issuer of credit cards.
 -0- 8/17/93
 /CONTACT: James J. Stork, CFA of Duff & Phelps Credit Rating Co., 312-368-3125/
 (T)


CO: American Telephone and Telegraph Company; AT&T Credit Corp.; AT&T
 Capital Corp. ST: New York, New Jersey IN: TLS SU: RTG


PS -- NY051 -- 3535 08/17/93 12:07 EDT
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Publication:PR Newswire
Date:Aug 17, 1993
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