MOODY'S PLACES LONG-TERM DEBT RATINGS OF AMERITECH UNDER REVIEW (SR. AT Aa2); POTENTIAL INVESTMENT IN TELE DANMARK CITED.
New York, 10-27-97 -- Moody's Investors Service placed the long-term debt ratings of Ameritech Corporation and its supported affiliates under review for possible downgrade, concurrently with the announcement that Ameritech will invest over $3.0 billion in Tele Danmark, Denmark's largest telecommunications company. Ameritech's Prime-1 short-term debt rating and the long-term debt ratings of its domestic telephone subsidiaries are not on review and are confirmed at this time, pending further developments in the company's strategic plan.
Initially, Ameritech will acquire about 34% of Tele Danmark by buying 45 million shares of the company from the Kingdom of Denmark for about $3.2 billion in cash. Tele Danmark will then buy some additional shares from the government and retire them. Remaining government shares, if any, will be purchased by Ameritech. At the end of these transactions, Ameritech will own over 40% of the company.
Ratings under review are:
Ameritech Corporation - Counterparty rating of Aa2;
Ameritech Capital Funding Corporation - Guaranteed notes and debentures, rated Aa2; medium term notes rated at Aa2; shelf registration of debt securities, rated, (P)Aa2; and the company's counterparty rating of Aa2;
Ameritech New Zealand Funding Corporation - Cumulative mandatory redeemable preferred stock rating of "aa2";
Ameritech Savings and Security Plan Trust for Non-Salaried Employees - Guaranteed LESOP Loan rated at Aa2;
Ameritech Savings Plan Trust for Salaried Employees - Guaranteed LESOP Loan rated at Aa2.
Ratings confirmed are:
Ameritech Corporation - Prime-1 short term debt rating;
Ameritech Capital Funding Corporation - Prime-1 short term debt rating;
Illinois Bell Telephone Company - First mortgage bonds rated Aaa; Debentures rated at Aa1,shelf registration rating of (P)Aa1;
Indiana Bell Telephone Company, Incorporated - Debentures rated Aaa; shelf registration rating of (P)Aaa;
Michigan Bell Telephone Company - Notes and debentures rated Aa1, shelf registration rated (P)Aa1;
Ohio Bell Telephone Company - Notes and debentures rated Aaa;
Wisconsin Bell, Inc. - Debentures rated Aaa, shelf registration rated (P)Aaa.
Moody's review will concentrate on the strategic implications of Ameritech's decision to significantly expand its presence in the European telecommunications marketplace, the impact on Ameritech's financial flexibility as a result of its decision to fund this investment with cash, and the likelihood that Ameritech may further leverage its balance sheet to take advantage of developing telecommunications opportunities. The review will also focus on the expected timing , magnitude, and application of cash flows, the final financing package that will be developed to fund the investment and the overall impact of Ameritech's international diversification strategy on its creditworthiness.
Ameritech Corporation is a diversified international telecommunications holding company with additional holdings in cable TV and security monitoring. The company is headquartered in Chicago, Illinois.
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