S&P lowers Hawaiian Telcom

Standard & Poor's said it lowered its ratings on Hawaiian Telcom Communications Inc. and related entities, including the corporate credit rating, which was lowered to B- from B.

The outlook is negative.

The agency said that the ratings on these entities are removed from CreditWatch, where they were placed on Nov. 16, with negative implications because of financial and operating issues arising from continued back-office system delays.

The downgrade reflects S&P's concerns regarding lengthy delays in developing functioning back-office systems that have negatively affected the company's profitability and its ability to compete in an increasingly competitive marketplace, the company's highly leveraged financial profile, possible punitive regulatory actions arising from an ongoing Public Utility Commission review and marginal liquidity.

Tempering factors include the company's position as the incumbent telephone provider in Hawaii and a recently announced settlement with BearingPoint Inc., the provider originally contracted by Hawaiian Telcom to build and operate its new back-office systems, the agency noted.

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