Moody's: Kabel Deutschland likely to be cash flow negative

Moody's Investors Service predicted that Kabel Deutschland GmbH will be cash flow negative for the fiscal year 2006/2007 given its capital expenditures guidance of €240 million (versus previous guidance of €200 million to €220 million) and EBITDA guidance in the range of €370 million to €400 million.

The potential free cash flow deficit is somewhat mitigated by Kabel Deutschland's €200 million committed revolving facility and €38 million of cash and cash equivalents as of Sept. 30, but Moody's said the company has exhausted its financial flexibility within its current Ba3 corporate rating.

The outlook on the rating remains stable because the agency believes that the free cash flow deficit is unlikely to lead to a material increase in debt and that the company is likely to be modestly free cash flow positive in the next fiscal year.

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