Fitch: Rumo's Ratings Pressured by Cancellation of Capital Increase

RIO DE JANEIRO--()--The frustrated initiative of Rumo Logistica Operadora Multimodal S.A. (Rumo) to issue up to BRL650 million in new capital, pressures the company's ratings, as well as the ratings of its subsidiaries, according to Fitch Ratings.

On Feb. 3, 2016 Rumo announced that would cancel the private capital issuance due to a fall in share price, as potentially new subscribers would not be interested in such a transaction.

Fitch expects Rumo to conclude, during the first half of this year, material improvements to its capital structure and financial position and to seek healthier credit metrics that are more in line its cash flow generation. Improvements in its operating margins and cash flow generation during 2016 are also key factors to avoid further rating downgrades.

Rumo, America Latina Logistica S.A. (ALL) and its subsidiaries' ratings continue to be pressured by the weak liquidity, relevant debt refinancing needs and high leverage. On Sept. 30, 2015, Rumo reported consolidated cash and marketable securities of BRL949 million and short-term debt of BRL1.8 billion. In September 2015 (LTM), Rumo reported EBITDAR of BRL1,443 million and net adjusted debt/EBITDAR of 8.2x), on a consolidated proforma basis, according to Fitch's methodology.

Fitch rates Rumo and ALL Foreign and Local Currency IDRs 'BB-' and Long-Term National Scale Rating 'A(bra)'. The Rating Outlook is Negative. ALL's subsidiaries' Long-Term National Scale Rating are rated 'A(bra)'. The Rating Outlook is Negative.

The Negative Outlook reflects Rumo challenges to improve its aggressive capital structure and finance its expressive capex of BRL7.9 billion up to 2019 and the operating challenge to increase cargo volumes, during a weak macroeconomic and credit environment.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Primary Analyst
Gisele Paolino
Director
+55-21-4503-2624
Fitch Ratings Brasil LTDA
Praca XV de Novembro, 20 / 401-B
Rio de Janeiro, RJ 20010-010
or
Secondary Analyst
Claudio Miori
Senior Analyst
+55-11-4504-2207
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Gisele Paolino
Director
+55-21-4503-2624
Fitch Ratings Brasil LTDA
Praca XV de Novembro, 20 / 401-B
Rio de Janeiro, RJ 20010-010
or
Secondary Analyst
Claudio Miori
Senior Analyst
+55-11-4504-2207
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com