(The following statement was released by the rating agency)
Oct 02 - Fitch Ratings has placed PagesJaunes Groupe S.A.'s (PagesJaunes) 'B' Issuer Default Rating on Rating Watch Negative (RWN). The agency has also placed PagesJaunes Finance & Co. S.C.A.'s senior secured notes rating of 'BB-'/'RR2' on RWN.
The RWN is driven by the lengthy extension request process and the appointment of a 'mandataire ad-hoc' by the issuer to get the required debt extension approval levels from lenders.
Fitch recognises that PagesJaunes' business fundamentals have not materially changed since the agency downgraded it on 8 May 2012. Fitch also views as positive some elements introduced in the current extension proposals, such as the dividend restriction until the net debt leverage reduces to below 3.0x and the amortisation of the term loan A1 and cash flow sweep for term loan A3.
In Fitch's view if the mandataire process fails to resolve the difficulties between the company and its lenders, PagesJaunes may have little choice other than to seek further legal redress through a non-consensual process. This could lead to a multiple notch downgrade.
WHAT COULD TRIGGER A RATING ACTION?
Future developments that may, individually or collectively, lead to negative rating
- Inability to reach an agreement with the help of the mandataire (one or several notches downgrade)
- Funds from operations adjusted net leverage to increase above 5.5x for a sustained period of time following reduction in cash flows
- Significant reduction in internet revenue growth
Future developments that may lead to a resolution of the RWN and Negative Outlook include:
- Successful implementation of the proposed extend and amend plan
Future developments that may potentially lead to a resolution of the RWN and Stable Outlook include:
- Stabilisation of cash flows for a sustainable period