S&P downgrades Tele Columbus

S&P said it cut its long-term issuer credit rating on Tele Columbus AG, and the issue rating on the company's term loan, to D, default, from CCC.

The downgrade follows Tele Columbus’ Nov 11 announcement that it missed the coupon payment on its €650 million of senior secured notes, which was due Nov. 2. S&P does not rate the notes.

“The company is negotiating with lenders for a debt extension to 2028. In exchange, the owners would inject €300 million in equity to address the company's liquidity shortfall and support its fiber strategy. We understand that the company intentionally did not pay the coupon on the notes as part of the broader debt restructuring, although the company retains the necessary funds to meet all due payments. As the restructuring is ongoing and could last until March 2024, Tele Columbus announced the missed coupon payment will not be paid within the 30-day grace period,” S&P said in a press release.

The agency noted the restructuring does not include any debt reduction plans.

“We could raise the rating to CCC+ upon the completion of the company's debt restructuring. This is considering the company's improved short-term liquidity position thanks to an equity injection and interest savings, but also constrained by the company's highly leveraged capital structure and execution risks of its turnaround plan,” S&P said.

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