Dépêches
Fitch Maintains Rating Watch Positive on TAM S.A.
Dépèche transmise le 18 août 2011 par Business Wire
NEW YORK--(BUSINESS WIRE)--Fitch Ratings maintains the Rating Watch Positive on TAM S.A.'s (TAM) ratings as follows:
--Foreign currency Issuer Default Rating (IDR) 'B+';
--Local currency IDR at 'B+';
--Long-term national scale rating at 'BBB+(bra)';
--USD300 million senior unsecured note due to 2020 at 'B+/RR4';
--USD300 million senior unsecured note due 2017 at 'B+/RR4';
--BRL500 million debentures issuance due 2012 at 'BBB+(bra)'.
Fitch also maintains the ratings of TAM's fully owned subsidiaries on Rating Watch Positive as follows:
Tam Linhas Aereas S.A.:
--Foreign currency Issuer Default Rating (IDR) 'B+';
--Local currency IDR at 'B+';
Tam Capital Inc.:
--Foreign currency Issuer Default Rating (IDR) 'B+';
--Local currency IDR at 'B+';
Tam Capital Inc. 2:
--Foreign currency Issuer Default Rating (IDR) 'B+';
--Local currency IDR at 'B+';
Tam Capital Inc. 3:
--Foreign currency Issuer Default Rating (IDR) 'B+';
--Local currency IDR at 'B+';
--USD500 million senior unsecured note due to 2021 at 'B+/RR4';
On Aug. 16, 2010, Fitch placed TAM's ratings on Rating Watch Positive and LAN's 'BBB' IDR on Rating Watch Negative. These rating actions followed the announcement by TAM and LAN that they had reached an agreement to combine their holdings under a single parent entity. The Rating Watch Positive on TAM's ratings reflects the view that the combined credit profile of the two companies would be stronger than TAM's current credit profile. The merger of the two airlines has been delayed by anti-trust authorities. The ratings of TAM remain on Rating Watch Positive to reflect the possibility the transaction will ultimately be approved, and that the transaction, if approved would benefit TAM's creditors.
TAM's 'B+' and 'BBB+ (bra)' ratings reflect the company's high leverage and volatile cash flow generation during the last few years. They factor in the company's solid liquidity position and its strong market presence in the domestic air-passenger transportation sector, with a leading market share in Brazil's domestic and international markets of approximately 42.7% and 87.8%, respectively, during the first half of 2011. TAM's ratings also factors in the company's solid market position as the sole Brazilian airline operator in long-haul routes to Europe and the U.S., which is strengthened by several code share agreements. The 'B+/RR4' ratings on the company's unsecured public debt reflect average recovery prospects in the range of 31% - 50% given default. Industry-related risks such as fuel cost volatility, high operating leverage, and cyclicality are factored into the ratings, as is the company's high degree of sensitivity to changes in the macroeconomic scenario.
TAM's cash generation, as measured by Adjusted EBITDAR, was USD682 million (BRL 1.4 billion), and USD991 billion (BRL1.7 billion), and USD1.1 billion (BRL1.8 billion) during fiscal 2009, fiscal 2010 and the LTM period ended June 2011, respectively. TAM's adjusted EBITDAR calculation excludes the effect of the additional tariff reversal of approximately BRL405 million occurred during 2010. TAM's Adjusted EBITDAR margin has remained at 14.4% during LTM June 2011. The company had approximately USD7.3 billion (BRL 11.5 billion) in total adjusted debt at the end of June 2011. This debt consists primarily of USD5.4 billion (BRL8.4 billion) of on-balance-sheet debt and an estimated USD2.0 billion (BRL3.1 billion) of off-balance-sheet debt associated with lease obligations. The company's rental payments for the LTM June 2011 reached a total amount of USD263 million (BRL441 million). The company's net leverage, as measured by the Net Adjusted Debt/Adjusted EBITDAR ratio was 5.3 times (x) at the end of June 2011. TAM's unrestricted cash on its balance was USD1.4 billion (BRL2.1 billion) by the end of June 2011, resulting in a cash and marketable securities/revenue ratio of 17.5%.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 13, 2010);
--'Liquidity Considerations for Corporate Issuers' (June 12, 2007).
Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229
Liquidity Considerations for Corporate Issuers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=328666
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