S&P lowers DIA

S&P said it lowered the ratings on Distribuidora Internacional de Alimentación SA (DIA) to CCC+ from B and removed them from Credit Watch negative.

The downgrade reflects DIA's very weak liquidity and funding profile with more than €760 million short-term debt due within the next seven months, S&P explained.

The downgrade also considers significant uncertainty and execution risk linked to the group's plans to achieve a sustainable capital structure through a €600 million rights issue and a new long-term bank refinancing agreement of its €1 billion outstanding debt, the agency added.

DIA also faces a very likely breach of its financial covenant at the next testing date in February, S&P said.

The group is in advanced negotiations with banks to secure a refinancing agreement that will address its short-term liquidity needs, the agency noted.

But, S&P said it also understands that in another phase, the group will undertake negotiations to put in place a long-term bank-funded capital structure, including a capital increase.

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