Moody's reviews NLI ratings for possible downgrade
London, July 23 (BRidgeNews) - Moody's Investors Service released the
following comment Monday:
NTL under review for possible downgrade -- Moody's
LONDON (AFX) - Credit ratings agency Moody's Investors Services has put the
UK's largest cable company NTL Inc under review for possible downgrade.
Moody's warned that NTL, which is based in New York, 'could face a
substantial funding gap' if projected cash flow growth fails to materialise.
Moody's, which changed the outlook on NTL's ratings from stable to negative
in January, said today's review is prompted by 'continued concerns over NTL's
considerable debt level, notwithstanding strong EBITDA growth trends.'
While Moody's expects NTL to continue to 'meaningfully' increase EBITDA over
the next few years, it said 'the absolute magnitude of required increases
remains of considerable concern.'
Moody's also said the review reflects its perception of a 'substantial
weakening' of the company's access to capital markets and 'the resultant need
for the company to execute flawlessly in order to generate the cash flows
required to sustain its businesses or attract additional third-party financing'.
The review will focus on four factors, Moody's said, NTL's de-leveraging
initiatives, EBITDA trends, potential liquidity needs and management's ability
to execute on its business plan.
Moody's said it expects to conclude its review within three weeks after the
company's second quarter results due on July 26.
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'Moody's Investors Service today placed the debt and preferred stock
ratings for NTL Incorporated (NTL) and subsidiaries under review for possible
downgrade.
* * *
On January 12, 2001 Moody's changed the outlook on NTL's ratings from
stable to negative, reflecting the companies continued high debt levels
(relative to cash flow) which had not decreased in line with Moody's
expectations. Today's review is prompted by continued concerns over NTL's
considerable debt level (on both an absolute basis and in relation to
cash flow), notwithstanding strong EBITDA growth trends reported in Q1
2001 and Q2 2001 (as indicated by the pre-released Q2 2001 EBITDA
figure).
While Moody's expects that the company will continue to
meaningfully increase EBITDA over the next several years, the absolute
magnitude of required increases remains of considerable concern. The
review further reflects Moody's perception of a substantial weakening of
the company's access to capital markets and the resultant need for the
company to execute flawlessly in order to generate the cash flows
required to sustain its businesses or attract additional third-party
financing. While the company estimates that future funding needs have
generally been secured, Moody's continues to caution that NTL could face
a substantial funding gap if the company falls short of its projections
for rapid cash flow growth.
Our review will focus on (i) the company's de-leveraging initiatives,
(ii) the trends driving future EBITDA and free cash flow growth over the
medium-term (iii) potential liquidity needs and funding sources in the
event the company falls short of its aggressive projections, (iv) and
management's ability to successfully execute on its business plan,
improve subscriber economics, and ultimately grow its cash flow to a
level that can more adequately service the company's heavy debt load.
Moody's expects to conclude its review within three weeks of the
company's 2nd quarter 2001 results announcement.
NTL Inc. is a large telecommunications and cable communications provider
in the UK, Ireland and continental Europe. The company is based in New
York, NY and Hook, England.' End |
