S&P slashes Guacolda Energia

S&P said it downgraded its ratings for Guacolda Energia SA and its debt to CC from B-.

On Monday, the company reported a tender offer for a maximum purchase price of up to $80 million of its $407 million outstanding notes due 2025. It offers a total consideration of $450 per $1,000 in nominal value.

S&P said the offer doesn’t provide enough compensation to bondholders and it considers the offer equivalent to default.

“In addition, our forecast of Guacolda's deficit to service its debt in 2025 and the continued challenging operating environment suggest a realistic possibility of a conventional default, absent the proposed tender offer. The currently volatile industry conditions and higher coal prices have put pressure on Guacolda's working capital needs, weakening the company's ability to repay its $407 million bond due in April 2025. We forecast a deficit of about $200 million by mid-2025, which could widen further in case of unexpected dividend distributions, given that financial covenants don't limit them,” the agency said in a statement.

The outlook is negative.

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