DUFF & PHELPS: UNITED TELEPHONE COMPANY OF FLORIDA $70 MILLION 6 1/4 PERCENT FIRST MORTGAGE BONDS DUE 2003 RATED 'AA-'
CHICAGO, May 12 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `AA-' (Double-A-Minus) to United Telephone Company of Florida's (UTFL) $70 million offering of 6 1/4 percent first mortgage bonds due May 15, 2003. The bonds were priced at 99.195 to yield 6.36 to maturity. Proceeds will be used to reduce short-term debt and advances to its parent company, Sprint Corporation (NYSE: FON). After this offering, UTFL will have $205 million of first mortgage bonds available for sale under a shelf registration. United Telephone Company of Florida's financial protection measures are expected to remain strong, although the 1992 rate case resulted in less than the company had expected. Late in 1991, UTFL filed for a rate increase of $55 million. In June 1992, the Florida Public Service Commission (FPSC) ordered a net revenue decrease of $1.1 million based on an authorized return on common equity at a midpoint of 12.5 percent, within a range of 11.5 percent to 13.5 percent. Disappointing aspects of the order include the imputation of the equity ratio at 57.5 percent, versus the actual equity ratio of 61.5 percent at June 30, 1992; acceptance of postretirement health care costs as a recoverable expense, but deferring the recovery to future periods; and ordering the company to lower depreciation expense by $2 million versus the company's request for a $27 million increase in depreciation. Upon reconsideration, the FPSC reversed itself, in part, and allowed a $431,000 rate increase. Duff & Phelps expects UTFL's pretax interest coverages will remain above 4.0 times and internal generation of construction expenditures should remain near 100 percent. Also, UTFL is merging operationally with Central Telephone of Florida as a result of the March, 1993 merger of their parent companies, Sprint Corporation and Centel Corporation, respectively. The operational combination should allow UTFL to continue to keep tight control of its operating expenses. Our rating assumes that UTFL will not upstream cash to its parent beyond its normal dividend policy. United Telephone Company of Florida provides service to 1.1 million access lines in all or part of 24 counties in central and southwest Florida. UTFL is the largest of Sprint's telephone subsidiaries, comprising 26 percent of Sprint's total access lines. -0- 5/12/93 /CONTACT: James J. Stork, CFA of Duff & Phelps Credit Rating Co., 312-368-3125/ (FON)
CO: United Telephone Company of Florida ST: Florida IN: TLS SU: RTG
TM -- NY093 -- 7718 05/12/93 16:05 EDT
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|Date:||May 12, 1993|
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