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On Apr. 2, Standard & Poor's lowered the corporate credit rating on long-haul data service provider Williams Communications Group Inc. to "D" and removed it from CreditWatch. The ratings on the company's 10.875% senior redeemable notes due 2009 and redeemable cumulative convertible preferred stock were also lowered to "D" and removed from CreditWatch. All other ratings remain on CreditWatch with negative implications.
The downgrades followed the company's decision to defer payment of about $91 million in interest due on Apr. 1 on about $1.7 billion of debt and suspend the quarterly dividend payment on its preferred stock, says S&P analyst Michael Tsao. The company indicated that it may seek Chapter 11 bankruptcy protection if it is unable to restructure its debt. Tulsa, Okla.-based Williams Communications had total debt outstanding of about $5.9 billion at the end of 2001.
The ratings of Williams Communications' bank loan and other debt issues will be lowered to 'D' on the default of interest payments, a bankruptcy filing, or a restructuring, the last of which would be considered tantamount to default by Standard & Poor's. From Standard & Poor's RatingsDirect