Leap Wireless ratings on negative watch after restatement announcement - S&P |
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Mon, 12 Nov 2007 06:59
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MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services signalled it may cut California-based Leap Wireless International Inc's ratings, saying the company might trigger a potential default under its 1.1 bln usd senior secured credit facility because of its plan to restate certain audited results.'However, based on the company's public statements, we do not expect the magnitude of these errors to be substantial,' S&P added.The restatements are to correct errors in previously reported service revenues, equipment revenues, and operating expenses for fiscal years 2004, 2005, and 2006 and the first and second quarters of 2007.Leap indicated that the restatements were the result of errors related to its accounting for customers who voluntarily disconnected services. About one month of deferred revenue that was recorded for these customers when their monthly bills were generated was mistakenly recognized as revenue after their service was disconnected.The agency has placed Leap's ratings, including the 'B-' corporate credit rating, on creditwatch with negative implications.TFN.newsdesk@thomson.comndi/jroCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Leap Wireless shares plunge on restatement plans 