S&P puts TIM Hellas on negative watch

Standard & Poor's said it placed its B+ corporate credit rating on TIM Hellas Telecommunications SA and related entities on CreditWatch with negative implications following the announcement on Oct. 17 of the agreement by TIM Hellas' private-equity owners, Apax and Texas Pacific Group, to buy smaller rival Q-Telecom for €350 million.

S&P also placed on CreditWatch negative its outstanding debt ratings on related entities Hellas Telecommunications (Luxembourg) V and Hellas Telecommunications (Luxembourg) III, along with its 3 recovery rating on Hellas Telecommunications (Luxembourg) V's €925 million senior secured notes.

Ratings placed on negative watch include Hellas Telecommunications (Luxembourg) V's €925 million senior secured notes due 2012, which are rated B, and Hellas Telecommunications (Luxembourg) III's €355 million subordinated notes due 2013, which are rated B-.

The CreditWatch placement reflects the significantly higher-than-expected agreed price for the acquisition of Q-Telecom, which was previously anticipated to be about €250 million, S&P said. While this transaction should enhance TIM Hellas' business profile by increasing its market share and removing a fast-growing competitor from the Greek mobile market, the purchase price and uncertainty related to the funding strategy and ultimate impact on TIM Hellas' capital structure may lead to credit measures inconsistent with its current ratings, the agency said.

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