Fitch cuts Viacao Itapemirim notes to CCC

Fitch Ratings said it downgraded the foreign currency rating assigned to Viacao Itapemirim SA's $25.3 million 12% senior secured notes due Feb. 10 to CCC, with a negative Rating Watch, from B.

The rating action reflects the dependence of Viacao Itapemirim on external resources from its shareholder, Grupo Itapemirim, as the company was unable to complete a sale leaseback transaction to refinance the outstanding notes, the agency said.

The ability and propensity of Grupo Itapemirim to inject additional capital into Viacao Itapemirim remains uncertain. Fitch estimated that Viacao Itapemirim's cash flow from operations will not be enough to repay the entire balance outstanding and, therefore, repayment will likely depend on Grupo Itapemirim.

Viacao Itapemirim said it plans to repay the notes at maturity with cash flow from seasonally strong sales from holiday travel and with funds provided from its shareholder, Fitch said, and Grupo Itapemirim is planning to sell real estate assets to repay roughly 65% of the outstanding notes.

Nevertheless, uncertainty exists regarding the ability of Viacao Itapemirim's shareholder to sell all of the needed real estate assets and collect the associated proceeds before the Feb. 10 maturity date of the notes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.