"This downgrade has no effect on our rights offering. As we have said earlier, the underwriting agreements with our banks remain firm and so does the commitment from a group of our major shareholders." says Michael Treschow, Chairman of the Board, Ericsson.
As stated on July 26, the underwriting agreements are unchanged even if the company's credit rating were to drop to BB by Standard & Poor's or Ba3 by Moody's Investor Services.
"We consider it unlikely that our rating should fall two more steps before completion of the rights offering, and we are confident that the rights offering will be completed as planned," says Michael Treschow.
Like Moody's, Standard & Poor's has stated their expectation that, given Ericsson's current credit profile, the new rating will be affirmed once the rights offering has been completed.
Credit agencies have been systematically lowering their ratings for the communication equipment industry for some time. Ericsson views Standard & Poor's decision as related to their view of the industry in general.
The incremental financial impact of Standard & Poor's decision amounts to an increase in financing costs of approximately SEK 55 million annually.
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