On Jan. 16, 2008, Standard&Poor's Rating Services revised its outlook on Los Angeles, Ca.-based U.S. TelePacific Holdings Corp. (TelePacific) to negative from positive due to concerns about weaker operating trends and the company's ability to meet near-term covenant compliance given the step-downs incorporated in the credit agreement over the next few quarters. At the same time, Standard&Poor's affirmed the 'B-' corporate credit rating and all other ratings. TelePacific is a competitive local exchange carrier (CLEC). The outlook revision reflects our expectations for weaker earnings growth in 2008 because of higher churn, given the company's exposure to the mortgage and real estate sector in California and Nevada, and limited headroom under its covenants, which step down materially
