GTE DEBT AFFIRMED BY FITCH AFTER US SPRINT SALE ANNOUNCEMENT -- FITCH FINANCIAL WIRE --
GTE DEBT AFFIRMED BY FITCH AFTER US SPRINT SALE ANNOUNCEMENT
-- FITCH FINANCIAL WIRE --
NEW YORK, Jan. 2 /PRNewswire/ -- GTE Corp.'s (NYSE: GTE) $1.8 billion 'A' debentures are affirmed by Fitch following today's announcement of an agreement to sell its remaining 19.9 percent interest in US Sprint Communications Co. to United Telecom. GTE's 'F-1' commercial paper is affirmed, as is the 'F-1' commercial paper of GTE Finance Corp. The credit trend is improving.
United Telecom will pay $250 million in cash to GTE on Jan. 31 and $280 million in cash on July 1 for a total sale price of $530 million. GTE will use proceeds from the sale to reduce debt. The transaction is consistent with GTE's commitment to reduce leverage.
The sale of the US Sprint share also reflects GTE's strategic decision to focus resources on its telephone operations and cellular telephone businesses. GTE announced its decision to restructure its business in September 1991 as part of this strategic realignment.
The restructuring would affect the Electrical Products Group (EPG). Options under consideration include a sale, tax-free spin-off, or joint venture for EPG. Fitch believes these steps will help support credit quality at a level appropriate for the 'A' rating. Fitch expects the improvement in GTE's capital structure to continue over the next year. Financial results and credit quality will benefit from some modest improvement in the U.S economy in 1992.
GTE merged with Contel Corp. in March 1991, and is consolidating its operations with Contel businesses. GTE is also leading a consortium that has purchased a 40 percent interest in the Venezuelan telephone company, CANTV. Although the CANTV investment resulted in an initial increase in debt, Fitch expects that the restructuring and US Sprint sale will allow GTE to make timely reductions in leverage, including the debt associated with the CANTV investment.
GTE is headquartered in Stamford, Conn.
/CONTACT: Timothy Cain of Fitch, 212-908-0587/
(GTE) CO: GTE Corp. ST: Connecticut IN: TLS SU: RTG FC -- NY061 -- 6262 01/02/92 16:19 EST