Moody's downgrades Mega Energia

Moody's America Latina said it downgraded Mega Energia Locacão e Administracao de Bens SA’s corporate family ratings to Caa1 from B2 on the global scale and to Caa1.br from Baa3.br on the national scale and its R$70 million senior debentures to Caa2/Caa2.br from B3/Ba2.br. The outlook is negative.

The agency said the downgrade reflect the sudden deterioration in the company's operating performance and liquidity position that resulted in much weaker debt protection ratios. The severe deterioration in operational performance, as a result of lower-than-anticipated utilization rates in the cranes segment, and steep decline in revenues in the company's truck business in the second quarter has diminished the company's cash flow generation ability and squeezed its liquidity, Moody’s said.

The Caa1 corporate family rating incorporates the challenges Mega Energia faces to reduce fixed costs and improve earnings and margins, the agency said, as well as uncertainties regarding the future operations and the ability to obtain waivers for covenant breach under its debentures and meet existing financial obligations.

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