NEW YORK, Nov 12 - Standard & Poor's Ratings Services said today that it lowered its corporate credit rating on wireless tower provider SBA Communications Corp. (SBAC,Trade) to 'CCC' from 'B'. Standard & Poor's also lowered its senior secured bank loan rating on the company to 'CCC+' from 'B+' and its senior unsecured debt rating to 'CC' from 'B-'.
The ratings remain on CreditWatch with negative implications, where they were placed on Oct. 11, 2002 due to concerns over covenants and liquidity. The Boca Raton, Fla.-based company had total debt of more than $1 billion as of Sept. 30, 2002.
"The downgrade reflects our increased concerns over the potential for SBA Communications to violate several bank maintenance covenants within the next seven months. The company experienced a decline in sequential EBITDA in the third quarter of 2002 from the prior quarter due to a cutback in new leasing and network development activities by wireless carriers," said Standard & Poor's credit analyst Michael Tsao. "With capital expenditures by carriers likely to remain constrained at least through 2003 and the company having already taken major cost reduction measures, SBA Communications may not be able to materially improve EBITDA on a sustainable basis. This could lead the company to violate several bank maintenance covenants."
Standard & Poor's said that another reason for the downgrade is the increased risk of debt restructuring in the near term due to two factors. First, the company recently disclosed that it is actively exploring debt exchange or repurchase among several options that would help reduce leverage. Second, SBA Communications may be challenged to meet significant debt service in 2003 and still have adequate liquidity to deal with execution risks.
The ratings remain on CreditWatch with negative implications and could be lowered further if the company is unable to meet covenant requirements or undertake a distressed exchange. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www2.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.