Moody's
Investor Services today announced that it has downgraded the
long-term credit rating of Ericsson from Baa3 to Ba1 and continues to
review its rating for possible further downgrade pending completion
of the rights offering. The action does not affect the underwriting
of the rights offering.
"This
action by Moody's does not affect the underwriting agreement
from the banks nor the commitment from our largest shareholders. We
are fully committed to maintaining a very conservative financial
profile and the underwritten rights offering is an important element
of this strategy," says Michael Treschow, Chairman of the Board,
Ericsson.
The
terms agreed with the banks supports the underwriting even if the
company's credit rating were to drop to BB by Standard & Poor's
or
Ba3 by Moody's. Ericsson believes such a scenario is unlikely.
According to Moody's, their new rating will remain under review until
the completion of the rights issue, whereupon Moody's expects to
confirm the Ba1 ratings with a negative outlook.
Credit
agencies have been systematically lowering their ratings for
the communication equipment industry for some time. Ericsson views
Moody's decision as related to their view of the industry in general
and the company believes that it will not impact Ericsson's
leadership position in the market.
The
financial impact of this decision amounts to an increase in
financing costs of approximately SEK 101 million annually.
Ericsson
is shaping the future of Mobile and Broadband Internet
communications through its continuous technology leadership.
Providing innovative solutions in more than 140 countries, Ericsson
is helping to create the most powerful communication companies in the
world.
