Fitch Downgrades Arendal's IDRs to 'RD'

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has downgraded Arendal, S. de R.L. de C.V.'s (Arendal) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'RD' (Restricted Default) from 'C'. Concurrently, Fitch has affirmed the long-term rating on Arendal's outstanding senior unsecured debt issuances totaling USD100 million at 'C/RR4'.

KEY RATING DRIVERS

The downgrade to 'RD' follows the uncured expiry of a 120-day forbearance period signed on the initial expiration of the notes on May 23, 2016. Fitch considers the uncured expiry of a default forbearance period a restricted default given it represents a material reduction in terms compared with the original contractual terms.

The company continues negotiating with bondholders and seeks to reach an agreement in the near term.

RATING SENSITIVITIES

The company's ratings could be revised to 'D' from 'RD' pursuant to Fitch's rating definition. An upgrade is unlikely at this time.

LIQUIDITY

Arendal's liquidity position is insufficient relative to near-term debt maturities and projected negative cash flow generation. The company's cash balance as of March 31, 2016 was MXN925 million, compared to MXN3.6 billion of short-term debt maturities.

FULL LIST OF RATING ACTIONS

Fitch has taken the following ratings actions:

Arendal, S. de R.L. de C.V.

--Long-Term Foreign and Local currency IDRs downgraded to 'RD' from 'C';

--Senior unsecured notes due 2016 affirmed at 'C/RR4'.

Additional information is available at www.fitchratings.com

Applicable Criteria

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage (pub. 17 Aug 2015)

https://www.fitchratings.com/site/re/869362

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012135

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012135

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160923005839/en/

Fitch Ratings
Primary Analyst
Gilberto Gonzalez, CFA
Associate Director
+1-312-606-2310
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
Secondary Analyst
Alberto de los Santos
Associate Director
+52 81-8399-9100
or
Committee Chairperson
Alberto Moreno
Senior Director
+52-81-8399-9100
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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