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February 11, 2008 |
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GRUPO PETROTEMEX: S&P Cuts Corp. Credit Rating to BB+ from BBB- Standard & Poor's Ratings Services has lowered its long-term corporate credit rating on Grupo Petrotemex S.A. de C.V. to 'BB+' from 'BBB-'. S&P also lowered its national scale rating on Petrotemex to 'mxAA-' from 'mxAA'. The outlook is stable. "The downgrade reflects the increase in Petrotemex's debt leverage as a result of the company's recent acquisitions; our belief that the issuer's results will be weak relative to our expectations for year-end 2007; and our continued concerns regarding industry conditions and pricing environment, especially in polyethylene terephthalate (PET)," said S&P's credit analyst Laura Martinez. The ratings on Grupo Petrotemex reflect the company's aggressive financial profile, limited product diversity, exposure to PET price volatility, the industry's cyclical and capital-intensive nature, and the challenging operating environment in North America. The ratings also consider the company's strong market position as a leading producer of purified terephthalic acid in Mexico and the United States, as well as being a relevant PET and polyester fibers producer. In addition, the ratings take into account the company's low-cost position and state-of-the-art technology, and long-standing agreements with customers and suppliers. Currently, S&P does not rate any specific debt instrument from this company. The stable outlook reflects S&P's expectation that the company's credit metrics will improve during this year because of the consolidation of the PET production facilities that were recently acquired, some synergies derived from this acquisition, and higher PTA sales volumes, leading to a total debt-to-EBITDA ratio of approximately 3.0 and a funds from operations-to-total debt ratio of approximately of 25% by year-end 2008. The rating could be lowerd if market conditions deteriorate further or if its financial performance is weak relative to S&P's expectations. Conversely, consistent improvement in the company's financial profile, particularly a sustained total debt-to-EBITDA ratio below 2.5 and a FFO-to-total debt ratio of about 40% could lead to a positive rating action. Grupo Petrotemex SA - http://www.petrotemex.com/, through its subsidiaries Petrocel, Temex and DAK Monomers, produces purified terephtallic acid (PTA) and dimethyl-terphtalate (DMT), basic raw materials used in the polyester chain production. The company is the sole producer of PTA and DMT in Mexico and is the second largest producer and supplier in NAFTA. Petrotemex, through its subsidiary DAK Resins, produces PET in the United States for the U.S. market. The company is a subsidiary of Alpek, which in turn is a subsidiary of Grupo ALFA and has operations in Mexico and in the U.S. |
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