Moody’s: Ilim Timber view to negative

Moody’s Investors Service said it changed the outlook for Ilim Timber Continental SA to negative from positive.

“The negative outlook reflects Ilim Timber’s weak positioning within the B2 rating category given the deterioration in its credit metrics on the back of weak market conditions, as well as uncertainty over the pace and timing of credit metrics’ recovery during the next 12-18 months. The outlook on the rating also incorporates the risk of covenants’ breaches during this period,” said Moody’s in a press release.

Moody’s sees Ilim Timber’s leverage, measured as Moody’s-adjusted debt/EBITDA, to rise above 5x in 2019 from 2.9x in 2018 due to the fall in EBITDA, before improving to below 4.5x in 2020, on some return in profits and continuing debt reduction. The company cut its debt to €209 million as of June 30, from €287 million in 2017. Ilim Timber’s positive free cash flow, aided by moderate working capital needs and low maintenance capital spending, should cover its debt maturities of €24 million in 2020 and €21million a year in 2021-22, before a balloon repayment of around €140 million in 2023, the agency said.

Moody’s affirmed the B2 corporate family rating and the B2-PD probability of default rating.

© 2015 Prospect News.
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