Argentina’s IMPSA to issue US$65 million in notes

Industrias Metalurgicas Pescarmona S.A. (IMPSA) has proposed a one-year US$65 million issuance of notes to finance the Argentine hydropower equipment supplier’s capital needs for the coming year.

Fitch Ratings has assigned a B rating to the proposed issuance of notes to be due in 2009. Fitch said IMPSA’s credit rating is supported by sustained global demand for hydroelectric and wind technology and equipment.

The ratings agency said the increased attractiveness of renewable energy sources boosted IMPSA’s backlog to US$1.7 billion as of January 2008, from US$481 million in April 2006. It said that has added certainty to the company’s cash generation in the medium term.

Balanced against IMPSA’s strengths, Fitch said, are its high leverage, its sound capital needs to finance project developments, and the concentration of cash flow in a few large projects in developing countries, namely Brazil, Venezuela, Colombia, and Malaysia. Fitch said a sudden downturn in key markets could negatively affect IMPSA’s ability to add new contracts.

For the 12 months ended January 31, IMPSA’s revenues grew to US$285 million and its earnings before interest, taxes, depreciation, and amortization (EBITDA) grew to US$67 million compared to US$267 million and US$57 million in the previous year.

Fitch said growth in EBITDA should occur from the completion of several projects currently in backlog. The main hydro projects are 660-MW Porce 3 in Colombia (HNN 10/11/07); 2,400-MW Bakun in Malaysia (HNN 5/9/08); 261-MW Dardanelos (HNN 2/29/08) and 333.7-MW Simplicio (HNN 5/15/08), both in Brazil; and 2,910-MW Antonio Jose de Sucre (Macagua) and 2,320-MW Manuel Piar (Tocoma), both in Venezuela. (HNN 5/27/08)

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