Printer Friendly

Fitch Downgrades Orius Corp's Senior Sub Notes To 'CCC+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 2, 2001

Fitch has downgraded the rating for NATG Holdings, LLC's (NATG's) $150 million 12.75% senior subordinated notes due 2010 (Notes) from 'B' to 'CCC+'.

NATG is a wholly owned subsidiary of Orius Corporation (Orius or the company) and is the issuer of the notes. The rating action is based on materially below plan revenue and pro forma EBITDA generation levels and the unfavorable conditions prevailing in the telecom and broadband infrastructure services market. The notes remain on Rating Watch Negative. This reflects Fitch's view that without forbearance from senior secured lenders for the anticipated June 30, 2001 covenant violations and an improvement in market demand, further downgrades may be warranted.

The company has made two downward revisions to projected results since the notes rating was originally issued in October 2000. The downward revisions reflect weakening demand for infrastructure services from the core cable television and telecommunications customer base. A seasonal improvement in demand from the broadband customer base did not occur as expected. Major telecommunications customers have reined in capital spending due to slowdown in their markets and the lack of capital market appetite for new issuance from some of the newer market participants. Management does not forecast any near term recovery in market conditions.

Revenues for the second quarter of 2001 are expected to be approximately $155-$160 million, which is about sequentially flat compared to the first quarter of 2001 and down 30-34% relative to the second quarter of 2000. The second quarter 20001 pro forma EBITDA margin is estimated at 12-13% ($18.6-$20.8 million).

Orius expects that it will violate the maximum 4 times (x) leverage and 2.25x minimum interest coverage covenants contained in its bank credit facilities for the last twelve months ending June 30, 2001. The company is in negotiations with lenders to obtain covenant relief and is dependent upon forbearance to avoid technical default. As of June 30, 2001, Orius had remaining borrowing capacity under its $100 million revolving credit facility of about $14 million, plus letters of credit outstanding), plus cash on hand of $25 million.

The company estimates annual fixed charges of approximately $75 million if capital spending is held to $2 million per quarter. In order to conserve cash, quarterly capital spending has been reduced to the minimum maintenance level of $2 million. The company also expects to increase liquidity by lowering its accounts receivables days outstanding from the current 105-day level and improving operational efficiencies.

Fitch notes that a new senior management team was put in place on June 26, 2001. Each of the new members has extensive industry experience. Members include; Ron Blake, Chairman and CEO, whose previous experience includes financial and executive management positions at Ameritech and SBC and Bob Wasserman, Chief Operating Officer, who spent the bulk of his career at AT&T and Ameritech.

Orius is a holding company, headquartered in West Palm Beach, FL, with operating subsidiaries engaged in the provision of telecommunications and broadband network infrastructure on a national basis. Services include the design, engineering, and installation of central office telecom equipment, premise-wiring, and cable. Willis Stein and Partners, a private equity investor, is the company's majority owner.
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1USA
Date:Jul 2, 2001
Words:536
Previous Article:REPEAT/Mediacom Communications and AT&T Broadband Close Sale of Missouri Cable Systems.
Next Article:Renewable Energy Systems -USA- Inc., Appears on Alexander Haig's World Business Review ``On Location'' Renewable Energy Solutions.
Topics:


Related Articles
Fitch Downgrades Three Classes Of Merrill Lynch Ser 1998-C1-CTL.
Fitch Downgrades Lehman/T&W Equip Lease Securitizations.
Fitch Downgrades ICON Capital Equip Lease Securitizations.
Fitch Rts NATG Holdings, LLC's Sr Sub Nts `B+'; Bank Facils `BB-'.
Fitch Rates NATG Holdings, LLC's Sr Subordinated Notes `B'.
Fitch Dwngrs United Companies Financial Corp. Manuf Housing Bonds.
Fitch Places Orius Corp's Sr Sub Nts On Rtg Watch Negative.
Fitch Dwngr Orius Corp's --NATG's-- Sen Subordinated Notes To 'CC'.
Fitch Dwngr Kmart Corp P-T Trusts, Ser 1995 K-1 & 1995 K-2.
Fitch Ratings Lowers Conseco Inc. Ratings.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters