Fitch cuts Profilo Telra to CCC

Fitch Ratings said it downgraded the ratings of Profilo Telra Elektronik Sanayi ve Ticaret AS, including its local- and foreign-currency issuer default ratings to CCC from B and national long-term rating to BB(tur) from BBB+(tur). The ratings were simultaneously placed on Rating Watch negative.

Fitch said it also downgraded HD Capital SA's foreign-currency senior unsecured rating to CCC from B and placed it on Ratings Watch negative. HD Capital is the debt-issuing vehicle of Profilo for its €50 million 10 ¾% loan participation notes issued in December 2006 and maturing in 2011.

The downgrade follows Fitch's revision on the company's outlook to negative due to its concerns about the lack of timeliness of Profilo's financial disclosure and therefore non-compliance with certain terms and conditions in the documentation for its loan participation notes.

The action also reflects Fitch's concerns regarding Profilo's 2006 financial performance, which has been characterized by sales sizably below budget, operating losses, negative cash flow from operations and increasing debt levels.

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