Fitch Places Rural Cellular’s Ratings on Watch Positive After Acquisition Announcement

Fitch Ratings has placed the following ratings of Rural Cellular Corporation (Nasdaq:RCCC) on Rating Watch Positive subsequent to the announcement that Verizon Wireless (VZW) will acquire the company for approximately $2.7 billion in cash and assumed debt.

–Issuer default rating (IDR) ‘CCC’;

–$60 million first lien credit facility ‘B/RR1′;

–$510 million second lien secured notes ‘B-/RR2′;

–$325 million senior unsecured notes ‘CCC-/RR5′;

–$600 million senior subordinated notes ‘CC/RR6′;

–12.25% junior exchangeable preferred stock ‘C/RR6′.

RCCC’s Rating Watch Positive status reflects Fitch’s view that the acquisition by VZW will significantly improve RCCC’s financial and business profile. Verizon Wireless expects the acquisition to result in at least $1 billion of synergies through reduced roaming and operational expenses. The acquisition of RCCC’s rural properties is complementary to VZW’s network with some coverage overlap as the merger will increase VZW’s coverage by 4.7 million licensed persons of population (POPs). RCCC serves approximately 700,000 subscribers and covers nearly 7.2 million POPs. RCCC uses both CDMA and GSM technology separately across its five regional markets. Verizon Wireless plans to deploy CDMA service in Rural Cellular’s existing GSM markets and convert the GSM customers to CDMA service. The transaction has been approved by both companies’ boards and is expected to close in the first half of 2008, subject to governmental and regulatory approval.

Fitch expects VZW to redeem or refinance the majority of RCCC’s high cost capital structure. Subsequent to first quarter ending, RCCC fully repaid the borrowings under its $60 million credit facility. Approximately $1 billion of RCCC’s debt and preferred stock is redeemable in 2007 and over $900 million of debt will become redeemable in 2008. Fitch’s Issuer Default Rating (IDR) on Verizon Communications is ‘A+’.

Fitch’s Recovery Ratings (RR) are a relative indicator of creditor recovery on a given obligation in the event of a default. A broad overview of Fitch’s RR methodology as it relates to specific sectors, including a Case Study webcast, can be found at http://www.fitchratings.com/recovery.

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.