DUFF & PHELPS: U S WEST COMMUNICATIONS, INC. $150 MILLION 6 1/8 PERCENT NOTES DUE 2005 RATED 'AA'
CHICAGO, Nov. 9 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of 'AA' (Double-A) to U S WEST Communications, Inc.'s (USWC) $150 million offering of 6 1/8 percent notes due Nov. 15, 2005, and 7 1/8 percent debentures due Nov. 15, 2043. The non-callable notes were priced at 99.873 to yield 6.14 percent. The debentures are non- callable for 20 years and were priced at 99.269 to yield 7.18 percent. Proceeds will be used to refinance higher cost long-term debt. The strong credit quality of U S WEST Communications is demonstrated by solid pretax coverage of interest expense, a low ratio of debt to cash flow, substantial funding of construction spending from internal sources, and parent infusions of equity to maintain USWC's moderate financial leverage. Duff & Phelps expects modest improvements in measures of financial performance due to operating efficiencies gained as a result of plans to further reduce employees and interest expense savings from refinancing of high cost debt. In the third quarter of 1993, U S WEST Communications recorded a $3.9 billion after-tax plant write-off and restructuring charge. This caused its debt ratio to jump to 66 percent at Sept. 30. The majority of the charge is related to the company's decision to begin depreciating its plant according to accounting principles used by competitive companies, as opposed to those used by regulated entities. Just over $600 million of the charge relates to costs associated with a restructuring of USWC's customer support operations and other cost- cutting initiatives. Only this piece of the total charge will result in cash outlays. However, savings from reduced employment levels, work center consolidations, and lower interest expense due to refinancings should lead to significantly lower future expenses. U S WEST Communications, Inc. provides local telecommunications services to 13.7 million access lines in a fourteen state region in the western United States. The company was formed by the Jan. 1, 1991, merger of Northwestern Bell Telephone Company and Pacific Northwest Bell Telephone Company into Mountain States Telephone and Telegraph Company. -0- 11/9/93 /CONTACT: James J. Stork, CFA of Duff & Phelps Credit Rating Co., 312-368-3125/
CO: US WEST Communications ST: Illinois IN: TLS SU: RTG
TM -- NY116 -- 2422 11/09/93 16:22 EST
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|Date:||Nov 9, 1993|
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