LONDON, May 19 /PRNewswire/ -- Fitch IBCA and Duff & Phelps Credit Rating
Co. (DCR) have placed Tecnost S.p.A's senior unsecured rating of 'A-' (Single-
A-Minus) on RatingAlert Negative pending resolution of merger discussions
underway with Olivetti S.p.A (Olivetti).
Tecnost, the principle shareholder of Telecom Italia and indirectly
Telecom Italia Mobile, and its parent Olivetti, the Italian high technology
conglomerate, have announced an agreement to consider a corporate merger.
Such a move is logical and will simplify the existing complex shareholding
structure and would also potentially see Olivetti moving closer to the
substantial cash flow of Telecom Italia. However, it is as yet unclear what
the financial implications would be for the merged entity and the extent to
which the merger could increase the financial risk of the Tecnost bondholders.
Any move is likely to see an increase in the level of debt to be serviced from
Telecom Italia's cash flow as Olivetti would bring a further EUR2.5 billion of
debt to the existing EUR15 billion of Tecnost bonds. It may also see the
Olivetti debt ranking pari passu and result in possible deterioration of
coverage ratios.
Additionally, Telecom Italia is also considering a receivables
securitisation. This factor has been taken account of in the above rating
action as it may adversely effect the credit profile of Tecnost.
Fitch IBCA will continue to monitor these developments and will meet with
management should a formal agreement be signed to obtain clarification of the
structure of the new entity and the effects this would have on bondholders and
investors. The outcome of the agency's RatingAlert will then be commented on
accordingly.
For additional research on the Tecnost S.p.A., visit DCR's web site at
http://www.dcrco.com (Quick Search: Tecnost). DCR's research is also
available on Bloomberg at DCR, First Call's BondCall Direct/Research
Direct at http://www.firstcall.com and Multex at http://www.multex.com, as
well as through other third-party providers
SOURCE Duff & Phelps Credit Rating Co.
 back to top
Related links:
http://www.dcrco.com
CONTACT:
Raymond Hill, +44-20-7417-7948,
hillr@dcrco.com, or David Staples, +44-20-7417-4282,
dstaples@fitchibca.com, or Stuart Wheeler, +44-20- 7417-4336,
swheeler@fitchibca.com, all of DCR
|
