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Fitch Downgrades Famsa's IDRs to 'RD' on Exchange Completion; Subsequently Upgrades them to 'CCC-'
18 DEC 2019 12:11 PM ET
Fitch Ratings - Mexico City - 18 December 2019:
Fitch Ratings has downgraded Grupo Famsa, S.A.B. de C.V. (Famsa)'s Long-Term Local Currency, Foreign Currency Issuer Default Ratings (IDRs) and the national long-term rating to 'RD' from 'C' on the completion of Famsa's exchange offer. Fitch considers the debt exchange, which closed on Dec. 10, 2019, as a distressed debt exchange (DDE) under Fitch's DDE criteria. Subsequently, Fitch has reassessed and upgraded the IDRs and the national long-term rating to 'CCC-' post completion of the exchange. A full list of rating actions follows at the end of this release.
The 'CCC-' ratings reflect the fact that Famsa has not completely eliminated the refinancing risk for the untendered USD59.1 million notes due in June 1st 2020 and there still are credit concerns of high debt burden and weak FCF generation. The ratings also reflect Famsa's high execution risk in the company's strategy, amid a very competitive market and expectations of soft consumer demand.
Fitch has also assigned a 'CCC-'/'RR4' rating to Famsa's USD80.9 million 9.75% senior notes due 2024 which were issued arising from the exchange offer.
The rating on Famsa's outstanding untendered USD59.1 million 7.25% senior unsecured notes due June 1, 2020 has been upgraded to 'CC'/'RR5', reflecting the lower recovery prospects and lower levels of creditor protection as the exchange's percentage of acceptance eliminated restrictive covenants and certain events of default included in the 2020 senior notes indenture. Fitch has also withdrawn the rating of Famsa's untendered 2020 unsecured notes that were partially exchanged for the new 2024 notes.
18 DEC 2019 12:11 PM ET
Fitch Ratings - Mexico City - 18 December 2019:
Fitch Ratings has downgraded Grupo Famsa, S.A.B. de C.V. (Famsa)'s Long-Term Local Currency, Foreign Currency Issuer Default Ratings (IDRs) and the national long-term rating to 'RD' from 'C' on the completion of Famsa's exchange offer. Fitch considers the debt exchange, which closed on Dec. 10, 2019, as a distressed debt exchange (DDE) under Fitch's DDE criteria. Subsequently, Fitch has reassessed and upgraded the IDRs and the national long-term rating to 'CCC-' post completion of the exchange. A full list of rating actions follows at the end of this release.
The 'CCC-' ratings reflect the fact that Famsa has not completely eliminated the refinancing risk for the untendered USD59.1 million notes due in June 1st 2020 and there still are credit concerns of high debt burden and weak FCF generation. The ratings also reflect Famsa's high execution risk in the company's strategy, amid a very competitive market and expectations of soft consumer demand.
Fitch has also assigned a 'CCC-'/'RR4' rating to Famsa's USD80.9 million 9.75% senior notes due 2024 which were issued arising from the exchange offer.
The rating on Famsa's outstanding untendered USD59.1 million 7.25% senior unsecured notes due June 1, 2020 has been upgraded to 'CC'/'RR5', reflecting the lower recovery prospects and lower levels of creditor protection as the exchange's percentage of acceptance eliminated restrictive covenants and certain events of default included in the 2020 senior notes indenture. Fitch has also withdrawn the rating of Famsa's untendered 2020 unsecured notes that were partially exchanged for the new 2024 notes.
