Fitch Downgrades Transtel Intermedia IDRs to 'D' Following Debt Exchange Announcement
2009-01-08 13:23:04 -
Fitch Ratings has downgraded the foreign and local currency Issuer Default Ratings (IDRs) of Transtel Intermedia S.A. (Transtel) to 'D' from 'C'. These rating actions follow the announcement by the company today that it is seeking to exchange its 2016 senior notes with new senior secured step-up notes. The terms of this offer, which was made in the midst of the 30 day grace following the company's missed coupon payment on Dec. 1, 2008, qualifies as a distressed debt exchange due to the diminished terms of the proposed notes.
In conjunction with this announcement, Fitch upgrades the company's US$170 million senior notes due 2016 to 'CC/RR4' from 'C/RR4'. The 'CC' rating of these notes reflects the expectation of an average recovery of a defaulted debt obligation.
Transtel's exchange offering intends to align its debt service with its cash flow generation, which has been deteriorating over the past year. The company's liquidity will be further challenged on Dec. 31, 2008, when it faces a US$4.5 million maturity of its 2008 bond.
As of June 30, 2008, Transtel had COP4.5 million of cash and marketable securities and COP370.8 million of total debt. Of the total debt, COP23.2 million was scheduled to come due in the next year. Revenues and EBITDA for the latest 12 months (LTM) ended June 30, 2008, amounted to approximately COP98.3 million and COP65.3 million respectively. These figures compare with COP108.2 million and 74.3 million during 2007. The decline in revenues and EBITDA has been due to increased competition from fixed line operators and increased migration of traffic to mobile networks.
Transtel controls and operates seven telephone systems and one cable system serving residential and commercial subscribers in 10 cities including Cali and its metropolitan area, the municipalities of Popayan and Jamundi. The company offers local telephone, data, Internet and to a lesser extent pay television services. As of June 30, 2008, Transtel had over 229,038 lines in service, 40,917 Internet subscribers including 23,607 broadband users and 12,818 pay television subscribers.
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.
Fitch Ratings
Sergio Rodriguez, CFA, +52 (81)8335-9100 (Monterrey)
Mauro Storino, +55 21 4503-2600 (Rio de Janeiro)
Tyrene Frederick-Mack, +1-212-908-0540 (Media Relations, New York)
tyrene.frederick-mack@fitchratings.com
