Nextel targets $1.6 billion notes, $600 million convertibles for repayment

By Peter Heap

New York, Feb. 19 - Nextel Communications Inc. said it plans to continue efforts to improve its financial flexibility in the year ahead, specifically mentioning $1.6 billion of high-coupon notes and $600 million of convertibles for attention.

"We remain committed to our objective of achieving an investment-grade credit rating," executive vice president and chief financial officer Paul Saleh said during the company's earnings conference call.

"We will build on the progress we have already made with our balance sheet to further strengthen our financial position."

Looking ahead, Saleh said: "In 2004 we will continue to enhance our financial flexibility.

"We have $1.6 billion of high-cost debt that becomes callable for the first time later this year.

"We also have $600 million of convertible debt callable in June with a conversion price that is below the current value of our stock."

Nextel said it retired a total of $4.9 billion of debt and preferred stock during the year. Taking into account new borrowings, the Reston, Va., wireless phone company achieved $2.2 billion of net principal reductions during the 12 months.

At year-end, Nextel's debt net of cash was $8.2 billion, Saleh said.

Debt to OIBDA (operating income before depreciation and amortization) fell to 2.2 times at the end of 2003 from 3.8 times at the end of 2002. The weighted average cost of the debt dropped to 6.4% from 7.6% over the same period.

As of Dec. 31, Nextel had $2.3 billion of liquidity available.

For the year ahead, Nextel is projecting it will generate $1.6 billion of free cash flow, up from $1.3 billion for 2003 and $122 million in 2002.

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