Fitch 10 Most Distressed LatAm Corporates: TV Azteca's Cash Burn May Fuel Downgrade
OREANDA-NEWS. A difficult path to free cash flow generation for TV Azteca S.A.B. de C.V. (TV Azteca) caused by increased production costs and muted revenue growth sets the company up for a potential downgrade, according to the latest report in Fitch's 10 report series 10 Most Distressed LatAm Corporates.
One report will be released each day through Feb. 12th per the schedule found at the bottom of this release.
"TV Azteca needs to rein its cash burn to prevent a further ratings downgrade," said Alvin Lim, Director. "Failure to turn around negative free cash flow generation amid sluggish EBITDA growth, resulting in a vulnerable liquidity profile over the medium term, will pressure ratings."
TV Azteca will need at least MXN3.3 billion of EBITDA in 2016 to generate positive free cash flow. Fitch does not expect the company to meet the target as drastic cuts in production costs are unlikely, given the importance of competitive content. Also, Fitch does not forecast substantial increases in advertising prices during 2016 given the unfavorable operational outlook while continued EBITDA loss in the company's Colombian telecom operation is expected in 2016.
Fitch's 10 Most Distressed LatAm Corporates series will be released one report per day as follows:
Feb. 1st: Samarco Mineracao S.A.
Feb. 2nd: Companhia Siderurgica Nacional
Feb. 3rd: Pacific Exploration and Production Corporation
Feb. 4th: GOL Linhas Aeresas S.A.
Feb. 5th: Oi S.A.
Feb. 8th: GeoPark Latin America Limited Agencia en Chile
Feb. 9th: Ajecorp B.V.
Feb. 10th: TV Azteca, S.A.B. de C.V.
Feb. 11th: QGOG Constellation S.A.
Feb. 12th: Odebrecht Offshore Drilling Finance Ltd.