NEW YORK -- Debt issued by Maryland Cable Corp. was downgraded by Standard & Poor's yesterday to a bottom-tier rating with negative implications, suggesting that the troubled Prince George's County company's financial condition has deteriorated seriously.
"To date, there are no indications that Maryland Cable has been successful in effecting needed financial restructuring," Standard & Poor's said. The rating service added that even with a successful restructuring, payment of interest and principal on a $162 million subordinated note "would still be in doubt."
"I don't disagree with anything Standard & Poor's said," said John Motulsky, senior vice president of MultiVision, the Greenwich, Conn.-based operator of Maryland Cable and other cable franchises.
The lowered credit rating, to single C from double C, comes as no surprise. At the end of September, Maryland Cable was unable to make monthly principal repayments on its $92.5 million in bank loans and received a one-month waiver. Negotiations on a second waiver covering November and extending forward have yet to conclude, making the company technically in default.
Mr. Motulsky said the company and its creditors are operating under the conditions established in the first waiver and that a deal should be made final soon that would be backdated to the first of the month.
The company that was the precursor to Maryland Cable, which now operates in northern Prince George's County, Bowie and Leesburg, Va., began operating in 1982. In June, it had 77,489 subscribers.
Maryland Cable was acquired in 1988 by a Merrill Lynch investment partnership headed by MultiVision executives in a highly leveraged $198 million transaction.
The downgraded security is a $77.5 million note that pays no cash interest until 1994. Because of accrued interest, the note had swollen to $102 million as of Sept. 30 and will call for repayment of $162.4 million in 1998, when it is due.
Since the buyout, Maryland Cable has had consistent growth in revenues, high margins and strong operating profits, but it has not been able to cover financing costs.
During the summer, it hired Chemical Bank to advise on a financial restructuring. Discussions with a syndicate of commercial banks headed by Citicorp began late in the summer; a second series of discussions with bondholders is planned.