Fitch downgrades Vestel

Fitch Ratings said it downgraded Vestel Elektronik Sanayi ve Ticaret AS's long-term foreign- and local-currency issuer default ratings to B from BB-.

The outlook is stable.

Fitch also downgraded the senior unsecured rating of Vestel Electronics Finance Ltd.'s guaranteed issue of $225 million 8¾% 2012 maturity notes to B/RR4 from BB-.

The downgrades reflect concerns about the depressed profitability in Vestel's television business, which is putting pressure on consolidated operating margins and cash flow generation capacity, the agency said.

Vestels's very weak profitability caused its net debt-to-EBITDA leverage to deteriorate to 2.4 times in fiscal year 2007 from 0.9 times in 2006, according to Fitch.

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