S&P Downgrades Bulgarian Telecom Vivacom's Rating
The international rating agency Standard & Poor's (S&P) downgraded on Friday the rating of Bulgaria's third largest telecom Bulgarian Telecommunications Company (Vivacom).
According to S&P's official statement, quoted by Dnevnik.bg, the reason for this is the connection of Vivacom with the bankrupt Corporate Commercial Bank (KTB).
Vivacom retains its BB- rating, but the outlook is changed to negative, as 75% of the company's cash balance (BGN 118 M, as of end of January 2014) is in KTB.
The negative outlooks means that in the next six months the rating might be lowered.
According to S&P, the refinancing of Vivacom's EUR 150 M credit in exchange for shares was not likely and the company would seek a new loan elsewhere. S&P pointed out that the refinancing attempt might be unsuccessful, due to the weak macroeconomic framework of Bulgaria and the strong competition in the telecom sector.
The expected refinancing on part of KTB's majority shareholder Tsvetan Vasilev, who owns 43% of Vivacom, is also not likely anymore.
“If the eventual refinancing is unsuccessful, we see a risk for Vivacom to be written off as a loss, which would weaken its revenues and its ability to pay off the interests and raise the cost of financing,” S&P said.
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