Moody's rates Invitel debentures

Moody's America Latina Ltda. assigned a Ca.br rating on its Brazil national scale and a Ca rating on its global local currency scale to the proposed R$160 to R$260 million in local subordinated debentures due 2010 to be issued by Invitel SA.

The outlook is stable.

Moody's said the ratings reflect the rating agency's expectation that dividends received by Invitel will not provide cash flow sufficient to service the debentures and the remaining secured debt located at Invitel and Techold Participacões SA, Invitel's 100% owned subsidiary. Thus, the ratings are pegged entirely to ultimate anticipated recovery levels for Invitel's creditors.

Moody's said the Ca.br and Ca ratings reflect Moody's expectation of loss severity of 30% or greater for debenture holders under an assumed restructuring of the company's balance sheet that would allow it to service its debt obligations and the assigned ratings consider the possibility that Invitel will be capitalized by its shareholders, thus improving its capital structure.

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