Moody's downgrades Cableuropa

Moody's Investors Service said it downgraded Cableuropa SAU's corporate family rating to B3 from B1 and the €180 million 10½% senior notes due 2014 issued by ONO Finance plc and the €270 million 8% senior notes due 2014 issued by ONO Finance II plc to Caa2 from B3.

This concludes the review for possible downgrade begun in October, and the outlook is negative.

The downgrade reflects Moody's view that the current trading prospects and economic and competitive environment in Spain will adversely affect EBITDA growth and positive free cash flow generation capacity in the future, resulting in a deleveraging profile falling short of original expectations and constrained headroom under recently relaxed syndicated bank debt covenant levels.

The ratings had been placed on review following the company's announcement that it was negotiating with unions to potentially reduce its workforce significantly. The current rating positioning following the downgrade assumes the stabilization of Cableuropa's management team, including the appointment of a new chief executive officer on a timely basis and a smooth transition process.

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