DUFF & PHELPS: IDB COMMUNICATIONS GROUP, INC. $125 MILLION CONVERTIBLE SUBORDINATED NOTES DUE 2003 RATED 'BBB-'
CHICAGO, July 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `BBB-' (Triple-B-Minus) to IDB Communications Group, Inc.'s (IDB) pending $125 million issue of convertible subordinated notes due 2003. Proceeds are expected to be used for repayment of debt and general corporate purposes. IDB Communications has experienced rapid growth in recent years, both internally and through acquisitions. The company has financed much of this growth with issuance of equity. As a result, IDB's debt ratio dropped significantly by the end of 1992. Equity issued in a public offering in May 1993 and separately to fund the TRT acquisition will cause the debt ratio to drop by year-end 1993. As a result, pretax interest coverage has risen to 2.6 times in 1992 and is expected to improve further during 1993. Following the completion of the TRT acquisition approximately 80 percent of IDB's revenues will be generated by IDB WorldCom, which provides international private line and switched long-distance telephone services. Duff & Phelps expects international long-distance volumes to continue to grow in excess of 15 percent annually. AT&T, MCI, and Sprint are IDB's main competitors. Aggressive price competition by these companies in an attempt to hold or gain market share is a risk. However, industry pricing appears to have stabilized in recent quarters. Following this offering and the retirement of its senior debt, IDB will have a significant cash balance. Duff & Phelps believes IDB remains interested in further growth through acquisition, which exposes the company to possible earnings dilution and merger integration costs. However, the acquisitions of WorldCom and TRT have brought IDB significant additional fiber optic capacity and numerous international operating agreements, which are necessary to terminate long-distance calls into a foreign country. IDB is also expected to expand its offerings directly to end users. Although this expansion will require spending to develop its domestic network and to enhance its marketing effort, this move will significantly increase the market that IDB can address. -0- 7/26/93 /CONTACT: James J. Stork of Duff & Phelps Credit Rating Co., 312-368-3125/ (IDBX)
CO: IDB Communications Group, Inc. ST: IN: TLS SU: RTG
CK -- NY035 -- 5624 07/26/93 10:48 EDT
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|Date:||Jul 26, 1993|
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