Fitch rates notes Arcor BB-

Fitch Ratings said it assigned a B+ foreign-currency issuer default rating, BB local-currency issuer default rating and AA+(arg) national scale rating to Arcor SA and a BB-/RR3 rating to its $100 million proposed debt issuance due 2017.

The outlook is stable.

Arcor plans to use the proceeds of the $100 million notes for working capital and to repay 2007 debt maturities.

The ratings reflect the company's solid business position and its moderate leverage, along with its ability to manage its debt obligations and business position during the Argentine crisis, Fitch said.

Arcor benefits from its geographic revenue and asset diversification, the agency said, but its cash flow is concentrated in Argentina. Therefore, its foreign-currency issuer default rating is capped at the Argentine country ceiling, which is rated B+.

The ratings also reflect concerns that the company's cash flow is tied to the strength of the local economies in its key markets and its exposure to volatile commodity prices, Fitch said. The ratings also consider concerns about government interference, particularly in Argentina.

As of March, the company reported $355 million of debt and $64 million of cash, compared with $133 million of EBITDA in 2006.

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