Amendment: Fitch Upgrades Vitro's IDR to 'B'; Assigns 'B+' to Proposed US$1B Sr. Notes.MONTERREY, Mexico -- (The following is an amended version of a press release issued Tuesday, Jan. 30, 2007. It contains new information regarding Vitro's US$1 billion recent issuance as well as corrected rating information about Vitro's existing senior unsecured notes. Additionally, Vitro's 'F3(mex)' national short-term rating had been previously withdrawn prior to Tuesday's rating action.) Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has upgraded Vitro, S.A.B. de C.V. (Vitro) local and foreign currency Issuer Default Ratings (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) to 'B' from 'CCC' and has assigned a 'B+' rating to Vitro's US$1 billion proposed notes offering. Fitch has also upgraded Vitro's $225 million senior unsecured notes due 2013 to 'B+/RR3' from 'CCC/RR4', upgraded Vitro's national scale rating to 'BB+(mex)' from 'BB(mex)'. In addition, Fitch upgrades the following national scale ratings on Vitro's outstanding senior unsecured certificates: --MXP360 million due Oct. 2, 2008 to 'BB+(mex)' from 'BB(mex)'; --MXP1 billion due Dec. 22, 2008 to 'BB+(mex)' from 'BB(mex)'; --MXP1.14 billion due Feb. 5, 2009 to 'BB+(mex)' from 'BB(mex)'. The Outlook on all ratings is Stable. The rating upgrades reflect the improvement in the company's capital structure and debt profile, which significantly lowers refinancing risk In banking and finance, refinancing risk is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate bullet payments at the point of final maturity; often, the intention or assumption is that the borrower and eliminates structural subordination following the takeout Takeout A financing to refinance or take out another loan. of secured operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. debt. In addition, Fitch assigns the following ratings to Vitro's US$1 billion transaction, consisting of two tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". : --US$700 million 9.125% senior unsecured notes due Feb. 1, 2017 and callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. after 2012 'BB+/RR3'; --US$300 million 8.625% non-callable senior unsecured notes due Feb. 1, 2012 'BB+/RR3'. The notes are guaranteed by Vitro Envases Norteamerica, S.A. de C.V. (VENA) and its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. and Vimexico, S.A. de C.V. (Vimexico) and its wholly owned subsidiaries. The transaction closed on Feb. 1, 2007. The rating action also considers the improvement in Vitro's operations, supported by the strong performance of the glass containers division over the past year. Consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the 12 months ended Sept. 30, 2006 improved to US$368 million from US$326 million for the 12 months ended Sept. 30, 2005, and the EBITDA margin grew to 15.6% from 15.1%. Fitch expects EBITDA during 2007 to reach US$330 million-US$350 million. Vitro continues to face a challenging business and competitive environment, with high raw materials and energy costs and customer expanding in-house container production. During 2006, asset sales and capital increases helped improve the company's debt profile. Over the past year, Vitro completed the sale of its 51% interest in the glassware division, Vitrocrisa, for US$109 million in cash; sold real estate assets for US$143 million; and completed a capital increase for approximately US$50 million. Proceeds from these transactions were used to reduce debt, primarily at the holding company level. For the 12 months ended Sept. 30, 2006, the total debt-to-EBITDA ratio improved to 3.3 times (x) from 4.2x for the 12 months ended June 30, 2005. Fitch expects leverage ratios to remain stable at current levels. Proceeds from the offering will be applied to debt repayment and corporate purposes. As part of the refinancing Refinancing An extension and/or increase in amount of existing debt. process, VENA launched a cash tender offer for its US$250 million 10.75% senior secured guaranteed notes due 2011, subject, among other conditions, to obtain financing for the repayment of the notes. Additionally, VENA solicited consent from bondholders to amend the original notes indenture and release certain liens on the collateral. With this, the majority of the company's debt will be allocated at the holding company level and rank pari-passu to subsidiaries' unsecured obligations, eliminating structural subordination. It is expected that at closing of the transaction, the company's senior unsecured notes due in 2013 will share the same guarantee as and rank pari-passu with the new bonds. Vitro is the leading producer of flat glass and glass containers in Mexico, serving the construction, automotive, beverage, retail, and service industries. The company exports products to more than 70 countries. For the 12 months ended Sept. 30, 2006, the company had sales of $2.4 billion, EBITDA of $368 million, exports of $567 million and foreign sales by subsidiaries of $780 million. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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