S&P reviews Alestra

Standard & Poor's said it placed its BB corporate credit and issue-level ratings on Alestra S de RL de CV on CreditWatch with positive implications.

The CreditWatch placement follows the announcement that Alestra and Axtel SAB de CV (B-/positive watch/--) plan to combine their respective companies in a merger.

Under the terms of the merger, Axtel will remain an operating and publicly traded holding company and is expected to issue new shares that Alestra's parent company, Alfa SAB de CV (BBB/stable/--), will hold. Alfa will own roughly 51% of the combined entity. Per this agreement, Alfa's and Axtel's shareholders will nominate the combined entity's board of directors.

In S&P’s view, Alestra will have an improved competitive position and scale, a more robust network, and more solid commercial operations. However, it will also have weaker credit metrics because of Axtel's higher leverage.

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