Printer Friendly

ROCHESTER TELEPHONE CORPORATION FILES PLAN TO RESTRUCTURE ITS REGULATED TELEPHONE OPERATIONS

 CHICAGO, Feb. 9 /PRNewswire/ -- Rochester Telephone Corporation has filed a unique plan with the New York Public Service Commission (PSC) that would break its Rochester telephone business unit into two companies.
 The restructuring plan is an innovative approach to developing a structure by which the local exchange telecommunications industry might transition to a fully competitive environment. However, implementation of such a plan would bring with it many new uncertainties.
 The proposal is not expected to be implemented until mid-1994 at the earliest and is likely to undergo substantial changes in the interim. Therefore, it is impossible at this time to accurately gauge the impact of the proposal on Rochester Tel's credit ratings. Currently, Duff & Phelps Credit Rating Co. rates the first mortgage bonds of the company A+' (Single-A-Plus) and its unsecured debt A-' (Single-A-Minus). However, the proposed structure of the plan provides some insight into likely rating adjustments.
 At this time, Rochester Tel is an operating company with subsidiaries. The new plan contemplates a holding company structure. As currently proposed, the new holding company would assume just under 50 percent of the existing unsecured debt of Rochester Tel. Debtholders of the holding company would no longer have a direct claim on the cash flow and the assets of the Rochester telephone business unit, resulting in a weakening of the credit quality of this debt.
 Roughly one-third of consolidated debt would remain with the new network company, including all of the first mortgage bonds. This debt would essentially rank senior to the debt of the holding company. The credit rating of the network company debt would depend upon the unique business risks it would face under an as yet untested industry structure. The debtholders of the network company would be effectively insulated from the higher business risk of Rochester Tel's non-regulated operations. However, they would also not benefit from the earnings of the regional telephone operations and the non-regulated operations, as they do now. The existing debt of the regional telephone operations, approximately one-quarter of consolidated debt, is expected to remain with these operations. Duff & Phelps Credit Rating Co. will review the impact of the proposed changes and assign appropriate ratings to the debt of each entity when these plans are finalized.
 Rochester Telephone operates the 13th largest telephone system in the U.S., serving nearly 900,000 access lines. Fifty-five percent of these lines are in the Rochester telephone business unit serving the Rochester, New York area. Another 9 percent of lines are located elsewhere in New York and the remaining 36 percent are scattered throughout 13 states in the Midwest and Southeast. Non-regulated subsidiaries provide long distance and cellular services, and telecommunications equipment sales and maintenance.
 -0- 2/9/93
 /CONTACT: James J. Stork, CFA of Duff & Phelps, 312-368-3125/
 (RTC)


CO: Rochester Telephone Corporation ST: New York IN: TLS SU:

WB -- NY082 -- 4795 02/09/93 15:45 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Feb 9, 1993
Words:480
Previous Article:UNITED PETITIONS FAA ON AN EMERGENCY BASIS TO RETURN SLOTS AT O'HARE
Next Article:DUFF & PHELPS: CNA FINANCIAL CORP., CONTINENTAL CASUALTY INTERCOMPANY POOL, CONTINENTAL ASSURANCE COMPANY RATING WATCH-UNFAVORABLE
Topics:


Related Articles
ROCHESTER TEL INTRODUCES COMPETITION FOR LOCAL TELEPHONE SERVICE; COMPANY PLANS TO REORGANIZE
ROCHESTER TEL ANNOUNCES CORPORATE RESTRUCTURING
ROCHESTER TELEPHONE CORPORATION $100 MILLION MEDIUM TERM NOTES (SHELF) RATED 'A-' BY DUFF & PHELPS
NEW YORK STATE DEPARTMENT OF ECONOMIC DEVELOPMENT SIGNS OPEN MARKET PLAN
ROCHESTER TEL SHAREOWNERS APPROVE CORPORATE RESTRUCTURING
DUFF & PHELPS CREDIT RATING CO. ASSIGNS RATINGS TO FRONTIER CORPORATION AND ROCHESTER TELEPHONE CORPORATION
DUFF & PHELPS CREDIT RATING CO. RATES ROCHESTER TELEPHONE CORPORATION'S $80 MILLION MEDIUM-TERM NOTE PROGRAM
YELLOW PAGES ADVERTISERS CAUTIONED ABOUT LOOK-ALIKE BILLS
FRONTIER CEO PREDICTS COMPANY TO DOUBLE SIZE BY 2000; SHAREOWNERS APPROVE ALL PROPOSALS AT ANNUAL MEETING
C-TEC Unit Approved for Alternative Local Telephone Regulations

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters