NEW YORK, NY and MCLEAN, VA. – Moody’s Investors Services announced its B3 corporate family rating of Primus Telecommunications Group remains stable following the company’s announcement Friday that it is selling its Canadian and U.S. retail telecommunications operations to York Capital Management for about US$129 million.
“This transaction represents a meaningful outcome of the board’s strategic process. The board is considering alternatives for the deployment of the proceeds from this sale,” Primus chair Neil Subin said in a prepared statement announcing the sale.
The transaction is currently expected to close by the third quarter of 2013, with the exception of the closing of the sale of its PTI subsidiary, which is expected to close later.
Last month, Primus also sold its Blackiron data center business to Rogers Communications for CAD$200 million.
Once the sales of its retail operations and Blackiron is complete, Moody’s says the company will have no continuing operations and over $275 million of cash and $128 million of senior secured debt. Moody’s says it expects Primus to repay all existing debt with the sale proceeds prior to or on the closing date of the North American Telecom transaction.
“The completed and pending sales of two major assets represent significant steps in monetizing PTGi's portfolio,” PTGi’s president and CEO Andrew Day said in a separate release yesterday. “Our board of directors is evaluating options for the deployment of the proceeds from the sale of Blackiron and, upon completion, the proceeds from the sale of North America telecom.”
Yesterday, Primus released results for its first quarter of 2013. Net revenue for its North America telecom operations was $51.3 million, a decrease of 14.3% from $59.8 million in the first quarter of 2012, The company attributed the decrease in net revenue primarily to declines in local and long distance services.
Consolidated net revenue was $60.9 million in the first quarter of 2013, a decrease of 10.5% from $68.0 million in the same period a year earlier. Primus reported a profit loss was $3.2 million, or $0.23 per basic and diluted common share, compared to $6.9 million, or $0.50 per basic and diluted common share, in the first quarter 2012.
PTGi president and CEO Day said that during the sale approval process, the company will continue to focus on its high margin on-net revenue streams such as hosted phone, Ethernet, local, and high speed internet.
