S&P cuts Di Giorgio outlook

Standard & Poor's lowered its outlook on Di Giorgio Corp. to negative from stable and confirmed its ratings including its senior unsecured debt at B.

S&P said the revised outlook is based on the uncertain impact on the company's operations from the termination of its supply agreement with the Great Atlantic & Pacific Tea Co., which represented about 25% of 2002 sales.

While Di Giorgio intends to reduce expenses to help compensate for reduced sales, the loss of business will have a negative impact on earnings, S&P said. The company will have to replace this significant lost sales volume in order to maintain operating stability.

Di Giorgio currently maintains very solid credit protection measures and liquidity for the existing rating, which could absorb some anticipated operating pressure before a downgrade would be necessary.

S&P added that Di Giorgio's ratings reflect the risks associated with the company's high customer and geographic concentration in a highly competitive food wholesaling industry and a heavy debt burden. These factors are somewhat offset by the company's dominant position in the New York metropolitan food wholesaling market and the strength of its White Rose brand.

EBITDA coverage of interest is in the mid-2.0x area, and total debt to EBITDA is 4.3x. Di Giorgio historically has generated positive free cash flow, S&P noted.

Moody's rates Indosat notes B2

Moody's Investors Service assigned a provisional B2 rating to PT Indonesian Satellite Corp. Tbk's proposed $200 million notes to be issued through Indosat Finance Company BV. The outlook is stable.

Moody's said the ratings reflect the solid growth potential of Indonesia's underserved, large and rapidly growing cellular market; the technology and operational benefits associated with ST Telemedia's participation; other revenue streams which provide for diversification, including IDD and MIDI services; and strong recurring operating cash flows generated by Indosat's stable and growing cellular subscriber base with its market share of 30%, although Moody's expects the company to remain free cash flow negative until at least 2006 as it expends substantial capital expenditure to upgrade and expand its network.

On the other hand, Moody's says the ratings also consider high levels of political, economic and social uncertainties in Indonesia; uncertainties associated with the regulatory environment for telecommunications; the challenges Indosat faces in executing its business plan in a competitive environment, and which may result in it remaining free cash flow negative for longer than anticipated; and Indosat's generally weak alternate liquidity profile.

Moody's noted that the planned bond issue is part of a larger refinancing exercise, involving dollar and rupiah bonds and a syndicated rupiah bank loan.

Moody's expects Indosat's leverage to increase to over 50% after the financing exercise as additional funds are raised to fund planned capital expenditure resulting in EBITDA/interest falling to a low of approximately 3.5-4.0x in fiscal 2004 and 2005 from 5.9x in fiscal 2002. However, the expected growth in EBITDA and gradual debt repayment will see interest coverage improving in subsequent years.

Moody's cuts YPF outlook

Moody's Investors Service lowered its outlook on YPF SA to negative from stable including its foreign currency bond rating of B1.

Moody's said the change was prompted by its revision of Repsol YPF's outlook to negative from stable.

S&P rates Italtractor notes B-

Standard & Poor's assigned a B- rating to Italtractor ITM SpA's proposed €100 million bond. The outlook is stable.

S&P said Italtractor's ratings reflect the group's high financial leverage and structural exposure to the expected strengthening of the euro against the U.S. dollar, as well as the challenges of cyclical demand.

These factors are partly mitigated by the group's expected benefits from radical industrial restructuring, strict financial discipline and an impending increase in liquidity reserves to more than €50 million.

The group's proposed bond will be rated one notch below the corporate credit rating, reflecting the fact that priority liabilities - consisting primarily of mortgage loans and receivable-secured facilities - are expected to represent 15%-30% of total adjusted assets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.