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S&P CUTS NORTEL CREDIT RATING
+DJ S&P Cuts Rtgs On Nortel Networks To B-; On Watch Dev.
04/28/2004
Dow Jones News Services
(Copyright © 2004 Dow Jones & Company, Inc.)
(MORE) Dow Jones Newswires
04-28-04 1544ET
PRESS RELEASE: S&P Cuts Rtgs On Nortel Networks To B-
The following is a press release from Standard & Poor's:
NEW YORK (Standard & Poor's) April 28, 2004--Standard & Poor's Rating Services said today that it lowered its 'B' long-term corporate credit rating and other long-term ratings on Nortel Networks Corp. and Nortel Networks Ltd. (collectively, Nortel Networks) to 'B-'. The CreditWatch implications are revised to developing from negative. The short-term corporate credit and commercial paper ratings are unchanged, and remain on CreditWatch with negative implications.
"The actions reflect an increased possibility that holders of Brampton, Ont.-based Nortel Networks' securities could provide notice of noncompliance to Nortel Networks, following its announcement of major changes to its senior executive team, in addition to an expansion of the existing investigation into its accounting for fiscal years 2001 through 2003," said Standard & Poor's credit analyst Bruce Hyman.
The major elements of Nortel Networks' April 28 announcement were the replacement of the CEO, CFO, and controller; and an update on the independent audit review, which will result in further restatements and revisions to previously reported financial results.
As a result of the previously announced delayed filing of its 2003 Form 10-K beyond March 30, 2004, Nortel Networks is not in compliance with obligations under its indentures on $3.6 billion in public debt. No notice of noncompliance has been provided by holders of its securities as a result of that delayed filing, although holders have had the right to do so since March 29, 2004. If holders of at least 25% of the outstanding amount of any debt securities were to provide such notice of noncompliance to Nortel Networks, and if the company were then to fail to file the 10-K within a further 90 days, the holders would have the right to accelerate the maturity of its securities. The ongoing review means the filing of the 2003 Form 10-K and first quarter 2004 financial reports will continue to be delayed. Nortel Networks' cash balances at March 31, 2004, were $3.6 billion, approximately equal to the outstanding debt, while the company has no other sources of liquidity; cash balances had declined by about $400 million since December 31, 2003.
As a result of the work to date by the independent audit review, Nortel Networks will have to further restate 2001 and 2002 financial statements and revise previously reported 2003 results. Net earnings for 2003 are expected to be reduced by about 50%, and will be reported in prior periods, resulting in a decrease in losses reported in 2002 and 2001.
(END) Dow Jones Newswires
04-28-04 1545ET
+DJ S&P Cuts Rtgs On Nortel Networks To B-; On Watch Dev.
04/28/2004
Dow Jones News Services
(Copyright © 2004 Dow Jones & Company, Inc.)
(MORE) Dow Jones Newswires
04-28-04 1544ET
PRESS RELEASE: S&P Cuts Rtgs On Nortel Networks To B-
The following is a press release from Standard & Poor's:
NEW YORK (Standard & Poor's) April 28, 2004--Standard & Poor's Rating Services said today that it lowered its 'B' long-term corporate credit rating and other long-term ratings on Nortel Networks Corp. and Nortel Networks Ltd. (collectively, Nortel Networks) to 'B-'. The CreditWatch implications are revised to developing from negative. The short-term corporate credit and commercial paper ratings are unchanged, and remain on CreditWatch with negative implications.
"The actions reflect an increased possibility that holders of Brampton, Ont.-based Nortel Networks' securities could provide notice of noncompliance to Nortel Networks, following its announcement of major changes to its senior executive team, in addition to an expansion of the existing investigation into its accounting for fiscal years 2001 through 2003," said Standard & Poor's credit analyst Bruce Hyman.
The major elements of Nortel Networks' April 28 announcement were the replacement of the CEO, CFO, and controller; and an update on the independent audit review, which will result in further restatements and revisions to previously reported financial results.
As a result of the previously announced delayed filing of its 2003 Form 10-K beyond March 30, 2004, Nortel Networks is not in compliance with obligations under its indentures on $3.6 billion in public debt. No notice of noncompliance has been provided by holders of its securities as a result of that delayed filing, although holders have had the right to do so since March 29, 2004. If holders of at least 25% of the outstanding amount of any debt securities were to provide such notice of noncompliance to Nortel Networks, and if the company were then to fail to file the 10-K within a further 90 days, the holders would have the right to accelerate the maturity of its securities. The ongoing review means the filing of the 2003 Form 10-K and first quarter 2004 financial reports will continue to be delayed. Nortel Networks' cash balances at March 31, 2004, were $3.6 billion, approximately equal to the outstanding debt, while the company has no other sources of liquidity; cash balances had declined by about $400 million since December 31, 2003.
As a result of the work to date by the independent audit review, Nortel Networks will have to further restate 2001 and 2002 financial statements and revise previously reported 2003 results. Net earnings for 2003 are expected to be reduced by about 50%, and will be reported in prior periods, resulting in a decrease in losses reported in 2002 and 2001.
(END) Dow Jones Newswires
04-28-04 1545ET
