Moody's upgrades Bite's 2014 notes to Caa1

Moody's Investors Service said it changed the outlook on Bite Finance International BV to positive from stable and concurrently upgraded the rating on the senior secured notes due 2014 to Caa1 from Caa2.

The corporate family rating and probability of default rating have been affirmed at Caa1 and the rating on the stub of unsecured notes due 2017 at Caa3.

Moody's said Bite's Caa1 corporate family rating reflects (i) the company's relatively small scale in the global telecommunications industry; (ii) its narrow geographical focus on the Lithuanian and Latvian markets; (iii) Bite's relatively weak market position as a "challenger" in Latvia; and (iv) the impact on the company's available liquidity of the expiry of its revolving credit facility over the next 12 months.

The rating also takes into account the company's established market position in Lithuania; the positive free cash flow generation in 2011 which is expected to be maintained in the future; EBITDA margins improvements on the back of tight cost control programs in the last couple of years; and Moody's expectation that the declining trend in revenues in Lithuania has now stabilized, the agency said.

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