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Orange Israel Put on Debt Ratings Downgrade Alert
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Israeli mobile network, Partner Communications (which trades as Orange) has had its debt ratings put on CreditWatch with negative implications by the ratings agency, Standard & Poor's Maalot.
In August 2012 the Hutchison group announced the cancellation of the acquisition of Partner's parent company, Scailex Corporation, and in S&P's opinion Scailex's current position could have a greater effect on Partner's financial situation than initially expected.
S&P said that the CreditWatch placement reflects its assessment that Scailex's expectations of dividends from Partner will impact on Partner's liquidity and financial metrics. This will occur alongside challenging market conditions for Partner, which they expect will likely have a negative effect on Partner's financials.
In light of the combination of the expected dividend pressure from Scailex and challenging market conditions they assess Partner's liquidity as "less than adequate".
In addition, S&P said that it believes that Partner's adjusted debt-to-EBITDA ratio will likely be about 3.4x at the end of 2012, which indicates a high leverage with respect to Partner's current rating, especially given its liquidity situation and market conditions. However, in the last year Partner has shown relative independence with regards to dividend distributions and, in addition, its results in 2012 have so far been in line with expectations.
S&P will make a final decision about the debt ratings within the next three months. However, they expect that a multi-notch downgrade is possible if the company does not present a clear path for improving its liquidity to a level they define as "adequate", alongside dealing with the competitive challenges.
Tags: [partner communications] [Israel]
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