S&P cuts Grupo Iusacell corp credit rating to CC
biz.yahoo.com
Reuters
Tuesday May 27, 4:06 pm ET
(The following statement was released by the rating agency)
NEW YORK, May 27 - Standard & Poor's Ratings Services said
today that it lowered its long-term corporate credit rating on
Mexican wireless service provider Grupo Iusacell S.A. de C.V.
(NYSE:CEL - News; Mexico:CELV.MX - News) to 'CC' from
'CCC+'. The downgrade reflects continued concerns regarding
Iusacell's ability to arrange funding by June 1, 2003, to pay its
approximately $25 million coupon, and the expectation that the
public debt at Iusacell will be restructured under distressed
terms.
The senior secured rating
on Grupo Iusacell Celular
S.A. de C.V. was lowered to
'CC' from 'CCC+', and the
senior unsecured debt
rating was lowered to 'C'
from 'CCC-'. All ratings were
removed from CreditWatch,
where they had been placed
on Nov. 5, 2002. The
outlook is negative. The
company had $805 million
of debt outstanding at
March 31, 2003.
The company indicated last November that it had hired a
financial advisor for the restructuring of its debt and up to now
has not given any indication of the terms. Iusacell exhausted its
debt service escrow account in December 2002, and its tight
liquidity position, limited financial flexibility, and uncertainty on its
ability to obtain further financing from its shareholders, increases
the likelihood of default. The company has received an
extension of its temporary amendment and waiver of certain
provisions and technical defaults under its $266 million secured
bank loan. "Upon failure to make its next coupon payment, or
completion of such a restructuring, the corporate credit rating,
senior unsecured debt rating, and senior secured debt rating
would be lowered to 'D'," said Standard & Poor's credit analyst
Patricia Calvo.
Standard & Poor's expects Iusacell's restructuring to be
distressed and that creditors will receive less than full recovery
given the company's negative cash flow and depressed
valuations for telecommunications assets.
Iusacell's financial profile has been adversely affected by weak
economic conditions and increased competition. Although the
company has implemented measures aimed at retaining and
attracting higher-end postpaid and prepaid customers that could
have a positive impact on its cash flow generation in the future,
its ability to service its overall debt is unlikely given Iusacell's
tight liquidity, comprised of about $5 million in cash and limited
credit line availability at the end of the first quarter. Complete
ratings information is available to subscribers of RatingsDirect,
Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action
can be found on Standard & Poor's public Web site at
www.standardandpoors.com; under Fixed Income in the left
navigation bar, select Credit Ratings Actions. |
