Fitch Latin America High Yield 2012-2013

Latin America High Yield
Comprehensive Analysis of B+ Issuers and Below
Volume IV
20122013
Corporates
Table of Contents
Executive Summary .................................................. 1 Latin America Non-Financial Institutions Corporate Financial Statistics ................................................ 11 AES Andres Dominicana, Ltd. .................................. 14 Alto Palermo S.A. (APSA) ........................................ 19 Arcor S.A.I.C. ............................................................ 25 Arendal, S. de R.L. de C.V. ...................................... 31 Axtel, S.A.B. de C.V.................................................. 33 Bio-PAPPEL, S.A.B. de C.V. .................................... 39 Cablevision S.A. ....................................................... 45 CAP Limited .............................................................. 51 Capex S.A. ............................................................... 56 Ceagro Agricola S.A. ................................................ 62 Celulosa Argentina Ltda. .......................................... 67 CEMEX, S.A.B. de C.V. ............................................ 71 Cimento Tupi S.A...................................................... 77 CLISA Compania Latinoamericana de Infraestructura y Servicios ..................................... 82 Compaa de Transporte de Energa Elctrica en Alta Tensin Transener S.A. (Transener)..................... 86 Corporacion Electrica Nacional S.A. (CORPOELEC) .............................................. 92 Corporacion Pesquera Inca SAC .............................. 95 Cresud S.A.C.I.F. y A. .............................................. 100 Digicel Group Limited ............................................... 106 Empresa Generadora de Electricidad Haina, S.A. .... 111 Empresa Generadora de Electricidad Itabo, S.A. ..... 116 Gol Linhas Aereas Inteligentes S.A. ......................... 121 Grupo Famsa, S.A.B. de C.V. ................................... 127 Grupo Posadas, S.A. de C.V. ................................... 132 Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda) ...................................................... 138 Industrias Metalurgicas Pescarmona S.A. (IMPSA) ... 144 Inversiones y Representaciones S.A. ....................... 150 Maestro Peru S.A. (Maestro) .................................... 156 Marfrig Alimentos S.A. .............................................. 160 Minerva S.A. ............................................................. 165 OAS S.A. .................................................................. 170 OGX Petroleo e Gas Participaes S.A.................... 180 Pan American Energy LLC ....................................... 185 Petroleos de Venezuela S.A. (PDVSA) .................... 189 Rede Energia S.A. .................................................... 193 Rodopa Industria e Comercio de Alimentos Ltda. .... 199 SANLUIS Rassini S.A. de C.V.. ................................ 203 Servicios Corporativos Javer, S.A.P.I. de C.V. ......... 207 Sidetur (Siderurgica del Turbio, S.A.) ....................... 213 Sifco S.A. .................................................................. 216 Telecom Argentina S.A. ............................................ 221 Transportadora de Gas del Norte S.A. (TGN) .......... 225 Transportadora de Gas del Sur S.A. (TGS) .............. 233 Urbi Desarrollos Urbanos, S.A. B. de C.V. ............... 238 Virgolino de Oliveira S.A. Acar e lcool ................ 243 WPE International Cooperatief (WPEI) ..................... 249 YPF S.A. ................................................................... 255 Fitch Analyst Directory ............................................. 260
Latin America High Yield November 8, 2012
Corporates
Latin America High Yield
Comprehensive Analysis of B+ Issuers and Below
Credit Outlook Turns Mildly Positive for Speculative Credits
Improving Macroeconomic Backdrop: Fitch forecasts GDP growth to be 3.9% in 2013 in Latin America, an improvement from 3.0% in 2012. Consumer demand is strong due to low unemployment levels, rising wages, modest inflation, improving consumer confidence, and wider access to credit. The key growth engine for 2013 is Brazil, which also has the highest number of leveraged corporates in the B rating category. Fitch expects growth to reach 4.2% in Brazil during 2013, a sharp improvement from forecasted growth of 1.5% in 2012. Record Capital Market Activity Lowers Refinancing Risk: Latin America corporates issued USD48 billion of debt in the international capital markets during the first nine months of 2012. This figure compares favorably with USD51 billion of issuance activity during the 12 months of 2011. Speculative credits such as Cemex, Digicel, Maestro, Minerva, PDVSA, Virgolino, Cimento Tupi, OAS, OGX, and VRG Linhas Aereas were very active during 2012, issuing about USD9 billion of debt. Eurozone Financial Crisis Should Not Hurt Access to Credit: Concern over the potential for a disorderly default in the eurozone has diminished. As a result, Fitchs base case scenario expects credit market access for Latin America corporates during 2013 to grow versus 2012 due to low interest rates in developed markets and high demand for emerging market debt. The risk of bank credits being withdrawn from B credits in Latin America due to the Euro crisis is small and manageable. Downgrades to Upgrade Ratio Should Revert to Normal Levels: The credit quality of highly speculative corporate ratings in Latin America weakened sharply during the first nine months of 2012. Fitch downgraded nine corporates rated B+ and lower and upgraded only four similarly rated companies. This compares with 23 upgrades and 21 downgrades for its broader Latin America corporate portfolio. The 2.2x ratio of downgrades to upgrades during 2012 should revert to around 1.0x during 2013. Negative Leverage Trends: Leverage ratios have been weakening since 2009 for the 48 companies rated B+ and lower due to USD16 billion of additional debt, which was offset by only USD1.4 billion of additional EBITDA. Lower levels of capex in 2013 and an improving operating environment should reverse the trend. During the LTM, the aggregate total debt/EBITDA ratio for these companies was 4.2x, while their collective net debt/EBTIDA ratio was 3.4x. In comparison, during 2009 these leverage ratios were 3.4x and 2.5x, respectively. Modest Direct Exposure to China and Commodities: Direct exposure to China and commodity prices is low among the weakest credits in Latin America. Only seven of the 48 speculative corporates are in the metals and mining, pulp and paper, or oil and gas sectors. All of their businesses are focused on their respective domestic markets. Above-Average Recovery Prospects in the Event of a Default: Fitchs bespoke analysis for 36 companies that have issued USD20 billion of bonds in the international capital markets indicates above-average aggregate recovery levels of 70% in the event of a default. Concerns about the bankruptcy framework in many markets, as well as the application and enforcement of existing laws, can limit the uplift on issuance ratings.
Analysts
Joe Bormann, CFA +1 312 368-3349 joe.bormann@fitchratings.com Jay Djemal +1 312 263-1032 jay.djemal@fitchratings.com Yolanda Torres +1 312 606-2301 yolanda.torres@fitchratings.com Juan Pablo Arias +1 312 606-2329 juan.arias@fitchratings.com Ingo Araujo +55 11 4504-2205 ingo.araujo@fitchratings.com Ana P. Ares +54 11 5235-8121 ana.ares@fitchratings.com Lucas Aristizabal +1 312 368-3260 lucas.aristizabal@fitchratings.com Miguel Guzman Betancourt +52 81 8399-9100 miguel.guzman@fitchratings.com Gabriela A. Catri +54 11 5235-8129 gabriela.catri@fitchratings.com John C. Culver, CFA +1 312 368-3216 john.culver@fitchratings.com Gabriela Curutchet +54 11 5235-8122 gabriela.curutchet@fitchratings.com Rogelio Gonzalez +52 81 8399-9100 rogelio.gonzalez@fitchratings.com Debora Jalles +55 21 4503-2629 debora.jalles@fitchratings.com Josseline Jenssen +591 2 277-4470 josselne.jenssen@fitchratings.com Viktoria Krane +1 212 908-0367, x1367 viktoria.krane@fitchratings.com
Managing Director of Latin America Corporates

Daniel R. Kastholm, CFA +1 312 368-2070 daniel.kastholm@fitchratings.com
Editorial Advisor
Traci Dixon, Editor
www.fitchratings.com
November 8, 2012
Corporates
Analysts (Continued)
Francisco Mercadal +5 62 499-3340 francisco.mercadal@fitchratings.com Cecilia Minguilln +54 11 5235-8123 cecilia.minguillon@fitchratings.com Alberto Moreno +52 81 8399-9100 Alberto.moreno@fitchratings.com Natalia OByrne +57 1 326-9999 natalia.obyrne@fitchratings.com Gisele Paolino +55 21 4503-2624 gisele.paolino@fitchratings.com Renata Pinho +55 11 4504-2207 renata.pinho@fitchratings.com Sergio.Rodriguez, CFA +5281 8399-9100 sergio.rodriguez@fitchratings.com Indalecio Riojas +52 81 8399-9100 indalecio.riojas@fitchratings.com Jose R. Romero +55 11 4504-2601 jose.romero@fitchratings.com Alberto de los Santos +52 81 8399-9100 alberto.delossantos@fitchratings.com Mauro Storino +55 11 4503-2625 mauro.storino@fitchratings.com Fernando Torres +55 11 5235-8124 fernando.torres@fitchratings.com Julio Ugueto +58 212 286-3232 julio.ugueto@fitchratings.com Jose Vertiz +1 212 908-0641 jose.vertiz@fitchratings.com Liliana Yabiku +55 11 4504-2208 liliana.yabiku@fitchratings.com
Strong Balance Sheets but High Government Meddling in Argentina: Argentine corporates have strong capital structures to mitigate issues such as high inflation, government intervention, economic uncertainty, and limited access to debt markets. Access to local and international debt markets is restricted due to concerns about the sovereign. Brazilian Corporates Should Benefit from Government Actions: Brazilian corporates in the B category are the most leveraged in Latin America. A rebound in the Brazilian economy would be an important step in reversing the negative credit trends that have developed since 2009. Small companies such as Cimento Tupi, Rodopa, Sifco, and Virgolino would benefit most from improving cash flow trends, as they do not have the business profile to attract lending under a distressed scenario. Corporate Governance Remains a Key Concern in Mexico: Many of the weakest credits in Mexico are controlled by families. Concern about corporate governance is extremely high among investors due to a bankruptcy regime that allows intra-company loans to be treated pari pasu with external debt. From a macro perspective, the near-term outlook for Mexican corporates is positive due to a rebound in its manufacturing sector.
2012 Portfolio Overview and Performance Review

Fitchs portfolio of corporates rated B+ and lower grew to 48 issuers in 2012 from 43 during 2011. The growth of the this speculative group of issuers was due to the addition of five new ratings in the B category Corporacion Electrica Nacional (Corpoelec), Maestro Peru, Rodopa Industria e Comercio de Alimentos Ltda., SANLUIS Rassini, Virgolino de Oliveira S.A., and Acucar e Alcool and the downgrade of four credits into the B category from the BB category Corporacion Pesquera Inca SAC (COPEINCA), GOL Linhas Aereas Inteligentes S.A., Pan American Energy LLC, and Urbi Desarrollos Urbanos, S.A.B. de C.V. During 2012, Fitch withdrew the B rating of Agro Industrial Vista Alegre Ltda., the B rating of ODS S.A. and the B rating of Galvao Participaes. The only company to get upgraded out of the B category was TAM S.A., which was upgraded to BB from B+ following its merger with LATAM Airlines Group. The credit performance of these 48 corporates was weaker than Fitchs broader Latin America portfolio. During the first nine months of 2012, Fitch upgraded the ratings of 23 corporates in Latin America and downgraded the ratings of 21 companies. In contrast, among the highly speculative ratings, downgrades outpaced upgrades by a ratio of 2.2x, as Fitch downgraded nine corporates and only upgraded the ratings of four companies rated B+ or lower. Upgrades included Arendal to B from B; TGN to CCC from D; Grupo Senda to B from B; and TAM to BB from B+. Notable downgrades include Urbi to B from BB; OGX to B from B+; Axtel to B, Rating Watch Negative, from B; and Transener to CCC from B. The only defaults among Latin America corporates during 2012 were those of Rede Energia and its subsidiaries, Centrais Eletricas do Para (Celpa) and Centrais Eletricas Matogrossenses S.A. (Cemat). Rede Energia had been rated B since 2009 and was downgraded to CCC in 2011, while Celpa and Cemat had been rated B since 2011. These defaults were due to the lethal combination of weak liquidity, high leverage, poor cash flow generation, and large investments.
Corporates
GDP Growth USA
(80%30% Confidence)
30% 40% 60% Actual 6 4 2 0 (2) (4) 2002 2006 2010 2014F F Forecast. Source: Fitch. (%) 30% 50% 70% Projected (%) 6 4 2 0 (2) (4)
Improving Macroeconomic Backdrop; Inflation Is Key Risk

The profile of the lowest rated corporates in Latin America can broadly be broken into two equal camps those companies domiciled in Venezuela, Argentina, Jamaica, or the Dominican Republic that face high systemic risk, and those whose credit profiles reflect specific, individual corporate risks. Among the second camp, key credit risks may be related to issues such as poor corporate governance, low liquidity, high leverage, and/or a weak business position. The common denominator between both camps is that all corporates benefit from strong regional growth and slow improvements in the global economy. Fitchs global growth forecast is 2.1% for 2012, 2.6% in 2013 and 3.0% in 2014%. These modest growth levels are projected despite forceful monetary policy interventions by the Fed, ECB, and BoJ during the second half of the year. They highlight sluggish economic growth in the major advanced economies where economic growth is projected at 1.0% in 2012, followed by only a modest acceleration to 1.4% in 2013 and 2.0% in 2014. In contrast to the weak economic outlook in the developed markets, the outlook looks bright for Latin America. Fitch forecasts GDP growth to be 3.9% in 2013 in Latin America and 3.9% in 2014. These figures represent an increase from forecasted growth of 3.0% in 2012. Key growth engines for 2012 will be Brazil at 4.2%, Peru at 6.2%, and Colombia at 4.8%. Chile is also projected to grow at an above-average regional growth rate of 4.6% in 2013, albeit a decline from 4.8% in 2012. Laggards in the region in terms of projected 2013 GDP growth rates include Mexico at 3.6%, Argentina at 2.7%, and Venezuela at 1.6%. At a macro level, central bank reserves are at historically high levels in Latin America, which should provide a buffer against negative external shocks. Foreign direct investment (FDI) levels are also robust and foreign currency-denominated sovereign debt obligations are relatively low for most countries and manageable. At a micro level, demand from consumers has been robust in most countries due to low unemployment levels, rising wages, modest inflation, and improving consumer confidence. These factors, which have led to higher disposable income, have been augmented by the increasing availability of credit in the region.
Real GDP Growth (%)

Country Argentina Aruba Bolivia Brazil Chile Colombia Costa Rica Dominican Republic Ecuador El Salvador Guatemala Jamaica Mexico Panama Peru Suriname Uruguay Venezuela IDR B BBB BB BBB A+ BBB BB+ B B BB BB+ B BBB BBB BBB BB BB+ B+ Outlook Stable Stable Stable Stable Stable Stable Stable Positive Stable Negative Stable Stable Stable Stable Stable Stable Positive Negative Country Ceiling B A BBBBB+ AA+ BBB BBB B+ B BBB BBB B A A BBB+ B+ BBB B+ 2011 8.87 8.90 5.17 2.70 5.99 5.93 4.16 4.48 7.78 1.47 3.87 1.50 3.90 10.56 6.87 4.43 5.70 3.95 2012F 2.01 (2.00) 5.17 1.50 4.83 4.19 3.70 3.90 4.75 1.65 3.06 0.50 3.80 7.69 5.79 4.42 3.90 5.08 2013F 2.71 8.60 5.16 4.20 4.63 4.82 3.87 4.14 3.74 2.35 3.20 0.90 3.60 7.24 6.17 4.88 4.16 1.55 2014F 2.79 2.60 5.28 4.00 4.94 4.96 3.73 4.84 3.98 2.45 3.42 1.20 3.80 6.34 6.27 5.20 4.93 2.56
F Forecast. IDR Issuer default rating. Source: Fitch.
Corporates
Growth in the BRICs
(%) Brazil Russia India China 2011 2012F 2013F 2014F 2.7 1.5 4.2 4 4.3 3.5 3.5 4 6.5 6 7 7.5 9.2 7.8 8.2 7.5
a India forecasts represent fiscal years: 2011 = FY12, 2012 = FY13. F Forecast. Source: Fitch.
Inflation remains a key risk for the region as loose monetary and fiscal policies in developed markets have increased the money supply. Several central banks in Latin America have taken actions to weaken their currencies in response to the measure taken by the Fed, ECB, and BoJ. In Latin America, food and energy are a disproportionally high percentage of the consumer basket. Food, as a percentage of the CPI basket, is more than 35% in Peru and ranges between 20% and 30% in Brazil, Colombia, and Mexico. Any sharp increase in the prices for these items could weaken disposable income in the region and could lower demand.
Weakening Leverage Trend Should Abate

Leverage ratios have been trending down since 2009 due to a USD16 billion increase in aggregate debt levels and only a USD1.4 billion increase in EBITDA. During the last 12 months (LTM), the aggregate total debt/EBITDA ratio for the companies rated B+ and lower was 4.2x, while the net debt/EBTIDA ratio was 3.4x. The former ratio compares unfavorably with ratios of 4.0x in 2011, 3.5x in 2010, and 3.4x in 2009, while the net leverage ratio shows weakness versus 3.1x in 2011, 2.6x in 2010, and 2.5x in 2009. Combined, the group of credits rated B+ and lower have USD12 billion of cash, USD13 billion of short-term debt obligations and USD63 billion of total debt obligations. These figures compare with USD15.1 billion of EBITDA generation during the LTM. They exclude PDVSA, which is owned by the Venezuelan government and is disproportionally large relative to the other 47 corporates. Leverage is significantly higher for the group if you eliminate the 24 companies domiciled in countries rated B+ or lower, whose ratings are capped by the sovereign ceilings of Argentina, Venezuela, the Dominican Republic, and Jamaica. The trends are also negative for this group of corporates. During the LTM, the 24 companies domiciled in the investment-grade countries Brazil, Mexico, and Peru generated USD5.4 billion of EBITDA. This compares with USD5.5 billion in 2011, USD6.2 billion in 2010, and USD5.6 billion in 2009. Total debt for these 24 companies increased to USD45 billion from USD34 billion during this time period, while cash and marketable securities declined to USD9 billion from USD10 billion. As a group, the total leverage ratio of the companies in investment-grade markets climbed to 8.4x from 6.1x, while net leverage rose to 6.8x from 4.4x. These ratios are heavily affected, however, by the increasing leverage of large companies such as Marfrig, Minerva, OGX, and CEMEX. Median ratios show far less leverage but similar trends. The median net leverage ratio of the Brazilian, Mexican, and Peruvian corporates was 3.8x in the LTM, similar to 2011 levels, but up from 3.2x in 2009.
BRIC Contributions to Quarterly Real GDP Growth

Net Exports Investment Government Consumption Private Consumption GDP (Year over Year %) 15 10 5 0 (5)
Source: IBGE, Fitch.
BRIC Industrial Production

(Year-over-Year Growth)
(%) 25 20 15 10 5 0 (5) (10)
Robust Debt Capital Market Activity to Continue; History Suggests Caution

Issuance totals were at elevated levels during 2012, as investors aggressively sought emerging market corporate debt due to slow economic growth rates and low interest rates in developed markets. Many Latin America corporates improved their capital structures by accessing financing with lower rates and longer tenors.
Source: FGV.
Corporates
Non-FI Latin America Corporate Debt Issuance
(First-Quarter 2006Thrid-Quarter 2012)
(USD Bil.) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 International Domestic Total
Source: Fitch Ratings.
During the first nine months of 2012, Latin America corporates issued USD48 billion of debt in the international capital markets. This compares favorably with the yearly totals for 2011, 2010, and 2009 of USD 51 billion, USD 44 billion, and USD 40 billion, respectively. Market activity was widespread and constant throughout the year. Through the first nine months, 70 different issuances occurred. This total is equal to that for all of 2011 and only slightly lower than the level achieved in 2010, when 72 different transactions occurred. The strong volumes heading into the last quarter suggest that new levels of market activity will be reached. In contrast to 2011, where market activity ground to a halt during the second half of the year following the acceleration of the euro crisis, cross border debt activity was relatively constant throughout 2012. High risk credits benefited from the strong market. Cemex, Digicel, Maestro, Minerva, PDVSA, Virgolino, Cimento Tupi, OAS, OGX, and VRG Linhas Aereas issued about USD9 billion of debt in the international capital markets, or about 20% of the cross border market activity. Local markets have also been a healthy source of funding for Latin America corporates. During the first nine months of 2012, Latin America corporates raised USD20 billion of debt through 141 issuances in the local debt capital markets. The most robust market in the region was Brazil, which accounted for USD14 billion of the total activity through 57 separate issuances. History suggests that Latin America corporates cannot count on market windows being open at all moments. The market was essentially closed to Latin America corporates during the third and fourth quarter of 2008 and during the month of August during 2011. Some of the largest debt amortizations occurring before the end of 2014 are those of Grupo Posadas (MXN2.250 billion, April 2013), and Digicel (USD510 million, April 2014).
GDP Growth Euro Zone

(80%30% Confidence)
30% 40% 60% Actual 6 4 2 0 (2) (4) 2002 2006 2010 2014F F Forecast. Source: Fitch. (%) 30% 50% 70% Projected (%) 6 4 2 0 (2) (4)
Eurozone Financial Crisis Should Not Hurt Access to Credit in 2013

Risks related to the Euro financial crisis remain the most crucial global risk monitored by Fitch in terms of urgency and the potential negative impact upon credits globally. As of Sept. 30, 2012, 45% of Western European sovereign ratings had a Negative Outlook, as did 37% of the financial institutions in the region and 21% of corporates. Weak business and household sentiment in the region, high unemployment levels, tight financing conditions and the impact of fiscal consolidation on domestic economic activity will curb growth in the eurozone. For 2012, Fitch projects that GDP in the eurozone will contract by 0.5%. During 2013 and 2014, Fitch projects continued weak growth rates of 0.3% and 1.4%, respectively.
Corporates
Key euro-related risks for speculative Latin America corporates are whether capital market access would disappear for a prolonged period of time and if bank lines would be withdrawn. Secondary risks would be whether economic growth rates in the region would drop sharply if broad-based support for the euro dissolved, which is not Fitchs base case, and whether export opportunities would diminish. Positively for all corporates, including the B rated companies in Latin America, concern over the potential for a shock to the eurozone from a disorderly default has been lessened as ongoing negotiations among politicians in Europe represent a willingness to maintain the European Union. The willingness to make concessions, as well as the aggressive position taken by the ECB, should result in a gradual normalization of financial market conditions. Fitchs base case scenario is that credit market access for Latin America corporates during 2013 will grow vis--vis 2012 given low interest rates and strong demand for emerging market debt. This type of environment suggests that most corporates will have the opportunity to refinance upcoming debt obligations, including the most speculative credits. It is doubtful, however, that the pace of market activity will remain as steady as 2012. The risk of bank credits being withdrawn from B credits in Latin America due to the Euro crisis is small and should be manageable. The largest foreign banking presence in the region is in Chile, where foreign loans as a percentage of GDP is estimated to be close to 30%. Fitch has no corporates rated in the B range in that country. In contrast, the presence of foreign banks is low in the countries where 60% of the B rated corporates are domiciled Argentina and Brazil. In Brazil, foreign bank loans are less than 10% of GDP and in Argentina they are less than 4% of GDP. If a credit line is withdrawn by a foreign bank in Brazil, most companies with reasonable business prospects should be able to obtain financing either from a government or private sector bank. The foreign banking presence in Mexico and Peru ranges between 12% and 15% of GDP. These two countries combined account for 23% of the lowest rated credits.
Trade Balance with China Five-Year Average (20062010)

Country Chile Costa Rica Peru Venezuela Brazil Argentina Bolivia Aruba Dom. Rep. Jamaica Colombia Uruguay El Salvador Guatemala Ecuador Suriname Mexico Panama LatAm X/GDP 6.2 3.6 3.0 1.5 1.1 1.7 0.8 0.0 0.3 0.7 0.4 1.0 0.0 0.1 0.4 0.3 0.2 0.0 1.1 M/GDP TB/GDP 3.5 2.7 2.5 1.1 2.6 0.4 1.2 0.3 1.0 0.0 1.8 (0.2) 1.2 (0.5) 0.9 (0.9) 1.4 (1.1) 1.9 (1.2) 1.7 (1.3) 2.4 (1.4) 2.0 (2.0) 2.2 (2.1) 3.0 (2.6) 3.2 (2.8) 3.4 (3.1) 5.6 (5.6) 2.0 (0.8)
Modest Direct Exposure to China and Commodities

The slowdown in Chinas economy to 7.6% in second-quarter 2012 from 9.3% in 2011 has refocused attention on the possibility of slower future growth rates. Fitch has trimmed its expectations for Chinas 2012 growth to 7.8% and expects growth to rebound slightly to 8.2% in 2013 due to some modest quasi-fiscal stimulus. Direct exposure to China and commodity prices is low among the weakest credits. Only seven of the 48 speculative corporates are in the metals and mining, pulp and paper, or oil and gas sectors. All of their businesses are focused on their respective domestic markets. None of them export to China. Two Brazilian protein producers, Marfrig and Minerva, have a very small percentage of their revenues linked to China Minerva through exports and Marfrig via a joint venture. Despite modest direct links to China among these credits, the indirect impact upon companies cannot be underestimated due to Chinas size and contribution to global growth. Since 2006, the level of exports from Latin America to China has increased to USD76 billion in 2010 from USD25 billion. Nearly 77% of the regions commodity sales and 70% of its total exports to China were comprised by only eight primary products: copper, feedstuff, gas, meat, metal ores and scrap, oil, pulp, and soy.
X Exports. M Imports. TB Trade balance. Source: UNCTAD, Fitch.
Corporates
Fitchs Ratings Actions During the Commodity Boom (20032011)
Country Brazil Argentina Peru Uruguay Bolivia Chile Colombia Panama Costa Rica Ecuador Mexico Suriname Venezuela Aruba Guatemala Dom. Rep. El Salvador Jamaica LT FC IDR BBB B BBB BB+ B+ A+ BBB BBB BB+ B BBB B+ B+ BBB BB+ B BB B Net Notching 6 5 4 4 2 2 2 2 1 1 1 1 1 0 0 -1 -1 -2
A Decade-Long Commodity Price Boom

(Jan. 2000 = 100)
Oil 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Bloomberg, Fitch. (Index) Soy Copper Gold
Totals are influenced by multi-notch upgrades/downgrades during sovereign defaults or restructuring exercises. Note: Countries in bold have deeper trade and financial linkages with China. LT Longterm. FC Foreign currency. IDR Issuer default ratings. Source: Fitch.
Five Latin American economies Brazil, Chile, Costa Rica, Peru, and Venezuela accounted for 81% of the total regional sales to the Asian giant in 2010. Among them, Brazil, Chile, and Peru have achieved the greatest ratings momentum by turning a cyclical upturn into credit strength, as they strengthened their external liquidity and solvency positions. Colombia has also benefited. On the other side of the equation, Jamaica and the Dominican Republic have suffered from rising energy and food costs, as it imports these products. These countries faced balance of payments imbalances and confidence shocks, making them reliant upon the IMF.
Higher Government Meddling in Argentina; Strong Balance Sheets

Argentine corporates represent 16 of the 48 companies rated in the B category or lower by Fitch. These companies have strong capital structures to mitigate issues such as high inflation, government intervention, economic uncertainty, and limited access to debt markets. The median liquidity ratio (measured by cash plus EBITDA/short-term debt) of these corporates is 2.0x, while the median leverage ratio is 1.6x. These key credit protection measures are much stronger than that of their B rated peer group, which are not constrained by systemic government risk. All but two of the corporate ratings in Argentina are capped by the B country ceiling of the Argentine government due to their exposure to the imposition of transfer and convertibility restrictions on foreign currency. The trend has not been positive for capital controls as the government has tightened exchange restrictions in response to declining reserve levels. Several of the ratings were placed on Rating Watch Negative on Oct 31, 2012, following Fitch's decision to place the B foreign currency issuer default rting (IDR) of the Republic of Argentina (Argentina) on Rating Watch Negative, as a result of increased uncertainty about the governments ability to service its international securities issued under New York Law due to a ruling in a U.S. court about on a timely basis using the U.S. financial system. In and of itself, this ruling should not directly affect the ability of the Argentine corporates to make payments on their foreign currency obligations using the U.S. financial system. Indirectly, this ruling may further affect the willingness of the Argentine government to provide corporates with foreign exchange to make payments to their cross currency debt obligations. Debt capital market activity has been limited for Argentine corporates due to concerns about government interference in the private sector. During 2012, no Argentine corporate issued bonds in the international markets. International issuances have ground to a halt following the governments actions after the 2011 elections particularly the nationalization of YPF, the
Corporates
LatAm's Main Trading Partners
(% of Total Exports and Imports )
China LatAm (%) 60 50 40 30 20 10 0 E.U. U.S.
imposition of additional capital controls on select industries, and the change in the central banks charter. Among companies with international ratings, only IRSA, IMPSA, Cresud, and YPF placed bonds in the domestic market during 2012. Many companies are reluctant to tap the local debt market following the nationalization of the pension funds, as they seek to limit the governments ownership of their stock and bonds. Argentinas economy is intertwined with Brazils through exports, as it ships about 20% of its exports to Brazil or close to 40% of its total Latin America exports. These corporates could benefit from a cyclical rebound in the Brazilian economy that should lead to growth in excess of 4% in Brazil during 2013. Approximately 67% of Argentine exports to Brazil are in the manufacturing sector. Vehicles and auto parts make up the bulk of this number. This sector should perform well in 2013. Argentina is also highly reliant upon the export of soybeans, which should enjoy a good year due to the record drought in the U.S. that has led to elevated soy prices globally.
Source: UNCTAD, Fitch.
Brazil Corporates Should Benefit from Government Actions; Trends Have Been Negative
Brazilian corporates in the B category are the most leveraged in Latin America and the credit protection measures have been weakening both in relative and aggregate terms. The dozen speculative credits in Brazil can be roughly divided into two groups: small companies with low leverage and large companies such as Marfrig, OAS, and GOX that have weak capital structures. A rebound in the Brazilian economy would be an important step in reversing the negative trends that have developed since 2009. Small companies such as Cimento Tupi, Rodopa, Sifco, and Virgolino would benefit most from improving cash flow trends, as they do not have the business profile to attract lending under a distressed scenario. Fitch expects growth to reach 4.2% in Brazil during 2013, a sharp improvement from forecasted growth of 1.5% in 2012. The poor 2012 performance is a result of the weak industrial sector, which contracted by 2.4% in the second quarter. This sectors performance was hurt by soft external market conditions and rising costs. Monetary stimulus as well as temporary tax breaks and continued quasi-fiscal stimulus through the development bank BNDES will be key components of the recovery. Key sales tax breaks include those on autos and white goods. Cement, steel, and construction companies should benefit from the governments USD66 billion plan to improve the countrys infrastructure. In terms of competitiveness, manufacturing companies should be better able to compete with their global peers due to measures the government recently took to reduce electricity tariffs. Exporters should benefit from a Brazilian real that is managed by the government to be in the range of BRL2.0/USD. This exchange level should also slow the tide of imports, as will import tariffs on approximately 100 different goods. The aggregate total leverage ratio for the dozen Brazilian credits rated in the highly speculative category was 12.6x during the LTM, while the net leverage ratio was 8.5x. These are increases from 9.5x and 5.8x in 2011. Some of the largest companies Rede, OGX, OAS, GOL, and Virgolino have driven the weakening of aggregate protection measures. Median ratios, which eliminate the impact of the large and highly leveraged companies, show lower leverage levels, but also highlight negative trends. For the LTM, the median net leverage
Corporates
ratio of the Brazilian credits was 5.2x. This ratio compares unfavorably with those of 4.5x in 2011 and 4.0x in 2010 and is about 60% higher than during 2009 when it was 3.2x.
Corporate Governance Remains a Key Concern in Mexico

The 10 credits in Mexico rated in the range of B+ or lower are in industries such as cement, home building, auto parts, oil services, food and beverage, packaging, retailing, lodging, and transportation. This disparate group of credits have few things in common other than high leverage. Some corporates, such as Arendal and Axtel, are small relative to their competitors. Others, such as Urbi and Javer, are relatively big companies within fragmented industries that exhibit high operating risk. Several companies are in the B category because their management teams have made poor strategic or financial decisions. This group includes companies such as Posadas, Cemex, Bio-Pappel, Senda, and SANLUIS. Unlike its peers in Brazil, the Mexican credits have been deleveraging during the past few years. The median net leverage ratio of the Mexican credits during the LTM was 3.3x. This ratio compares with 3.8x in 2011 and 3.7x in 2010 and 4.3x in 2009. From a macro perspective, the near-term outlook for Mexican corporates is positive. Mexicos exposure to the U.S. is high due to trade and remittances. For 2013 and 2014, Fitch projects U.S. growth rates of 2.25% and 2.8%, respectively. These growth rates should support growth levels in Mexico of about 3.6% in 2013 and 3.8% during 2014. Continuing challenges that need to be addressed to increase Mexicos low growth rate relative to other emerging economies are the countrys moderate saving and investment rates, monopolies in important industries, state ownership of the energy sector, high labor informality, and limited flexibility. A bright spot for the Mexican economy has been a revival of its manufacturing sector due to the countrys close proximity to the U.S. market and rising costs in China. The auto sector has probably been the sector that has benefited to the greatest degree. Unlike several countries in Latin America that have a high degree of exposure to China and commodity prices, Mexicos risks as they relate to those issues are more modest. Exports to China have averaged about 0.2% of GDP during the past five years, while imports have averaged 3.4% of GDP. While corporate governance is a global credit concern, unease is extremely high among investors in the weakest credits in Mexico. The bankruptcy regime in Mexico is relatively new and untested. There is a lack of precedent on many issues and rulings can be unpredictable. Many of the lowest rated Mexican corporates are controlled by families, despite being publicly traded companies. The participation of key family members as executives in business operations is high and there is often a lack of independent members in the board of directors. Related party transactions are numerous. The actions of Mexican glassmaker Vitro have elevated concerns about corporate governance and Mexicos bankruptcy regime. Vitro defaulted on its debt during 2009 due to declining demand for glass from construction and auto manufacturers, losses on derivative instruments, and a weak capital structure. After the default, the company created a very large intracompany loan. In late 2010, the company filed for bankruptcy and these intracompany loans were recognized by the judge in the case, which allowed them to vote on the restructuring plan. This essentially gave the companys shareholders the ability to impose large losses on external creditors and retain control. Vitros actions could have repercussions for companies that want to issue bonds in the future. CEMEXs new facilities agreement, which was completed in September 2012, had restrictions and conditions imposed on intercompany loans. Among them, any amount payable under any
Latin America High Yield November 8, 2012 9
Corporates
intercompany claim of any obligor would be subordinated to claims under the new facilities agreement and all other senior debt of such obligors in the event of insolvency or similar proceedings in relation to Cemex. The Intercreditor Agreement established a Mexican-law regulated voting trust mechanism whereby intercompany claims of Cemex entities incorporate in Mexico at any time would be voted in a Concurso Mercantil proceeding in accordance with a trustee that is under instruction from the third-party lenders under the new facilities agreement.
Recovery Prospects Are Above Average in the Event of a Default

Fitchs bespoke analysis for 36 companies that have USD20 billion of bonds in the international capital markets (excluding PDVSA) and have USD56 billion of combined debt indicates an aggregate recovery of 70%. This recovery level is consistent with above-average recovery expectations in the event of default, or an RR3 rating. Despite high anticipated levels of recoveries, many of the rated bonds have been assigned recovery ratings of RR4, which is consistent with recoveries in the range of 30%50%. The recovery ratings of many of these bonds were constrained due to concerns about the bankruptcy framework in many markets, as well as the application and enforcement of existing laws.
Fitch Default Rates by Major Sector: Jan. 1, 2012June 30, 2012

(%) AAA AA A BBB BB B CCC Investment Grade Speculative Grade All Includes CCC to C for corporates, sovereigns, and public finance. Source: Fitch Ratings. Global Corporates 0.00 0.00 0.00 0.00 0.00 0.79 15.38 0.00 1.07 0.33 Latin America Corporates 0.00 0.00 0.00 0.00 0.00 2.44 33.33 0.00 1.78 0.96
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Corporates
Latin America Non-Financial Institutions Corporate Financial Statistics
(USD Mil.) Company Name AES Andres Dominicana SPV (Aes Dominicana) Alto Palermo S.A. (APSA) Arcor S.A.I.C. Arendal, S. de R. L. de C. V. Axtel, S.A.B. de C.V. Bio-PAPPEL, S.A.B. de C.V. Cablevision S.A. Capex S.A. Ceagro Agricola Ltda. Celulosa Argentina S.A. CEMEX, S.A.B. de C.V. Cimento Tupi S.A. Clarendon Alumina Production Limited (CAP) Compania de Transporte de Energia Electrica en Alta Tension Transener S.A. Compania Latinoamericana de Infraestructura y Servicios Construtora OAS Ltda Corporacion Pesquera Inca SAC (COPEINCA) Cresud S.A.C.I.F. y A. Digicel Group Limited Empresa Generadora de Electricidad Haina, S.A. Empresa Generadora de Electricidad Itabo, S.A. GOL Linhas Aereas Inteligentes S.A. Grupo Famsa, S.A.B. de C.V. Grupo Posadas, S.A. de C.V. Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda) Industrias Metalurgicas Pescarmona S.A. (IMPSA) Inversiones y Representaciones S.A. Maestro Peru S.A. Marfrig Alimentos S.A. Minerva S.A. OAS S.A. OGX Petroleo E Gas Participacoes S.A. Pan American Energy LLC Petroleos de Venezuela S.A. (PDVSA) Rede Energia S.A. Rodopa Industria e Comercio de Alimentos Ltda. SANLUIS Rassini, S.A. de C.V. Servicios Corporativos Javer, S.A.P.I. de C.V. Siderurgica del Turbio, S.A. (Sidetur) Sifco S.A. Telecom Argentina S.A. Transportadora de Gas del Norte S.A. (TGN) Transportadora de Gas del Sur S.A. (TGS) Urbi Desarrollos Urbanos, S.A.B. de C.V. Virgolino de Oliveira S/A Acucar e Alcool WPE INTERNATIONAL Cooperatief U.A. YPF S.A. LTM as of June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 May 2012 June 2012 June 2012 March 2011 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 March 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 Dec. 2011 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 2009 63 17 186 5 107 75 38 24 4 6 1,080 9 1 16 93 138 12 56 492 40 79 818 131 50 11 93 68 4 1,743 244 392 4,216 232 6,981 238 2 13 62 58 49 341 81 271 336 N.A. 93 567 Cash 2010 2011 120 131 18 42 190 99 5 6 106 102 59 69 100 126 26 45 120 43 6 7 676 1,153 5 28 1 4 27 83 312 34 76 1,041 111 72 1,174 90 47 11 62 86 6 2,299 342 690 2,516 434 6,017 451 15 21 40 51 72 351 124 275 487 23 62 639 32 95 608 60 173 613 184 53 1,205 104 30 12 53 93 6 1,871 402 788 2,936 958 8,610 369 19 21 30 29 90 658 153 107 395 54 53 341 2012a 155 31 126 24 51 80 143 6 24 7 611 35 N.A. 28 61 384 43 110 343 149 51 843 134 35 7 61 84 6 1,499 405 925 2,942 753 N.A. 221 18 37 27 45 99 521 175 150 432 91 61 102 Total Short-Term Debt Total Debt 2009 2010 2011 2012a 2009 2010 2011 2012a 5 N.A. N.A. N.A. 161 164 164 164 62 52 30 18 246 226 180 172 178 140 161 154 417 497 449 472 29 31 27 35 31 32 35 37 72 53 27 26 758 844 894 873 3 7 9 9 260 275 282 248 52 33 72 101 542 512 655 652 8 20 20 27 261 199 230 238 10 9 34 31 34 131 156 149 80 69 77 72 212 173 157 159 595 465 381 109 19,381 17,894 18,162 17,251 20 30 26 33 42 63 155 215 128 89 169 N.A. 460 373 424 N.A. 14 58 19 38 142 350 6 N.A. 340 786 72 29 111 93 29 942 167 185 173 384 2,956 857 8 218 21 19 43 202 381 4 295 N.A. 111 1,238 13 107 46 16 272 166 20 N.A. 205 898 17 30 117 156 19 1,911 141 393 134 381 3,604 1,352 37 208 2 9 141 11 414 4 263 332 117 1,561 4 159 87 48 322 388 48 N.A. 835 890 40 35 169 167 46 1,491 291 521 12 447 2,396 1,939 57 41 8 5 155 4 453 4 461 271 169 1,894 4 159 98 83 242 228 48 N.A. 300 987 194 30 159 192 146 144 372 3,140 202 125 1,801 864 380 222 148 268 199 218 490 3,793 207 131 2,219 1,100 471 218 155 313 414 266 832 4,528 281 129 2,685 1,162 452 225 154 346 571 293 858 4,887 301 129 2,590 1,257 443 216 1,343 584 122 6,143 1,204 2,410 3,994 1,874 N.A. 3,725 98 259 275 79 368 29 473 378 1,426 1,092 1,343 2,350
324 578 579 845 127 370 421 597 64 53 55 111 1,698 3,252 6,055 6,437 139 703 972 1,131 635 719 1,554 2,019 43 173 141 2,574 747 1,554 1,759 1,756 N.A. 21,445 24,950 34,892 1,729 3,893 4,600 4,429 79 16 55 92 50 233 364 250 4 201 210 276 5 106 90 83 176 220 360 367 7 217 41 31 473 381 414 453 4 401 380 379 259 603 888 1,067 324 N.A. 717 879 324 578 579 845 2,186 1,804 1,969 2,980
a LTM. N.A. Not applicable. Continued on next page. Source: Fitch Ratings.
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Corporates
Latin America Non-Financial Institutions Corporate Financial Statistics (Continued)
Company Name LTM as of AES Andres Dominicana SPV (Aes Dominicana) June 2012 Alto Palermo S.A. (APSA) June 2012 Arcor S.A.I.C. June 2012 Arendal, S. de R. L. de C. V. June 2012 Axtel, S.A.B. de C.V. June 2012 Bio-PAPPEL, S.A.B. de C.V. June 2012 Cablevision S.A. June 2012 Capex S.A. June 2012 Ceagro Agricola Ltda. June 2012 Celulosa Argentina S.A. May 2012 CEMEX, S.A.B. de C.V. June 2012 Cimento Tupi S.A. June 2012 Clarendon Alumina Production Limited (CAP) March 2011 Compania de Transporte de Energia Electrica en Alta Tension Transener S.A. June 2012 Compania Latinoamericana de Infraestructura y Servicios June 2012 Construtora OAS Ltda June 2012 Corporacion Pesquera Inca SAC (COPEINCA) June 2012 Cresud S.A.C.I.F. y A. June 2012 Digicel Group Limited June 2012 Empresa Generadora de Electricidad Haina, S.A. March 2012 Empresa Generadora de Electricidad Itabo, S.A. June 2012 GOL Linhas Aereas Inteligentes S.A. June 2012 Grupo Famsa, S.A.B. de C.V. June 2012 Grupo Posadas, S.A. de C.V. June 2012 Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda) June 2012 Industrias Metalurgicas Pescarmona S.A. (IMPSA) June 2012 Inversiones y Representaciones S.A. June 2012 Maestro Peru S.A. June 2012 Marfrig Alimentos S.A. June 2012 Minerva S.A. June 2012 OAS S.A. June 2012 OGX Petroleo E Gas Participacoes S.A. June 2012 Pan American Energy LLC June 2012 Petroleos de Venezuela S.A. (PDVSA) Dec. 2011 Rede Energia S.A. June 2012 Rodopa Industria e Comercio de Alimentos Ltda. June 2012 SANLUIS Rassini, S.A. de C.V. June 2012 Servicios Corporativos Javer, S.A.P.I. de C.V. June 2012 Siderurgica del Turbio, S.A. (Sidetur) June 2012 Sifco S.A. June 2012 Telecom Argentina S.A. June 2012 Transportadora de Gas del Norte S.A. (TGN) June 2012 Transportadora de Gas del Sur S.A. (TGS) June 2012 Urbi Desarrollos Urbanos, S.A.B. de C.V. June 2012 Virgolino de Oliveira S/A Acucar e Alcool June 2012 WPE INTERNATIONAL Cooperatief U.A. June 2012 YPF S.A. June 2012
a LTM. N.A. Not applicable. Continued on next page. Source: Fitch Ratings.
Operating EBITDA (USD Mil.) 2009 2010 2011 2012a 82 164 183 150 49 113 144 157 210 193 248 265 4 7 18 36 294 261 256 240 71 81 55 68 389 449 464 483 53 34 45 41 19 58 50 49 42 52 65 60 2,768 2,372 2,080 2,321 37 32 34 33 (16) (14) (39) N.A. 48 85 63 60 88 676 45 70 320 119 95 54 110 19 76 195 753 79 (6) 581 138 83 32 140 112 100 226 919 112 27 109 121 68 8 148 21 112 197 1,070 119 43 1 141 71 66 N.A. 202 38 1,005 190 110 (448) 1,521 N.A. 607 35 93 72 84 54 1,339 11 173 327 128 N.A. 3,358
Cash/Short-Term Debt (x) 2009 2010 2011 2012a 12.60 N.A. N.A. N.A. 0.27 0.34 1.41 1.71 1.04 1.36 0.62 0.82 0.17 0.17 0.24 0.70 1.48 1.99 3.74 1.95 23.23 9.02 7.68 9.25 0.73 3.07 1.76 1.42 3.18 1.25 2.22 0.22 0.36 12.98 1.27 0.78 0.08 0.08 0.09 0.10 1.82 1.45 3.02 5.62 0.46 0.15 1.06 1.05 0.01 0.01 0.02 N.A. 1.21 1.60 7.24 0.33 0.39 1.41 6.59 N.A. 2.40 0.17 0.70 0.39 0.84 0.74 0.14 1.85 1.46 2.12 24.38 0.60 2.36 0.28 0.25 0.06 3.01 2.98 1.15 1.69 0.21 68.42 1.14 N.A. 0.84 0.46 2.05 0.78 6.74 2.13 0.28 6.27 5.66 N.A. 5.72 0.10 2.73 7.44 0.60 6.98 1.27 0.54 1.58 3.86 N.A. 1.44 0.12 0.76 7.36 0.38 3.90 0.52 0.45 1.51 3.13 N.A. 2.81 0.14 0.18
Cash+EBITDA/ Short-Term Debt (x) 2009 2010 2011 2012a 29.00 N.A. N.A. N.A. 1.05 2.49 6.27 10.37 2.22 2.74 2.16 2.54 0.30 0.38 0.93 1.75 5.55 6.91 13.13 11.15 45.36 21.34 13.78 17.13 8.22 16.86 8.26 6.22 10.21 2.93 4.44 1.75 2.31 19.31 2.77 2.37 0.60 0.84 0.93 0.93 6.47 6.55 8.48 26.97 2.26 1.23 2.37 2.04 (0.11) (0.15) (0.20) N.A. 4.72 3.06 10.58 1.88 1.01 3.34 14.02 N.A. 3.34 0.32 2.02 6.10 1.81 7.14 6.85 1.00 10.80 9.67 N.A. 8.55 0.25 7.57 14.84 1.47 8.27 3.36 1.24 3.95 6.21 N.A. 1.57 0.25 2.47 9.48 1.31 4.11 1.87 1.27 6.21 5.62 N.A. 2.82 0.28 0.54
40 62 58 99 102 180 114 180 186 19 25 34 471 891 954 107 146 176 92 106 188 (186) (244) (389) 1,487 1,435 1,779 11,065 24,171 18,684 684 723 752 14 16 36 39 86 90 83 71 64 119 33 62 21 51 56 1,032 1,151 1,312 70 48 18 204 175 181 316 329 312 N.A. 180 167 99 102 180 3,130 3,728 3,275
0.36 0.34 0.53 0.31 0.55 0.55 0.29 0.13 1.20 1.25 2.43 1.38 1.76 1.51 18.77 248.09 1.14 2.14 1.67 3.59 0.33 0.19 0.40 0.33 0.10 0.51 25.32 3.84 5.81 5.83 0.51 0.58 33.02 148.32 0.30 0.34 74.31 28.98 1.85 0.86 0.07 0.20 0.53 0.31 0.41 0.18
0.24 1.80 2.43 1.98 2.40 0.19 1.72 1.41 1.38 0.19 0.66 1.96 1.70 1.66 2.25 0.09 0.78 1.62 0.86 0.68 0.88 2.35 1.67 1.89 1.47 2.92 2.09 3.47 1.98 4.29 1.46 2.62 2.03 1.88 1.63 68.32 23.31 16.94 215.18 57.92 1.01 4.47 4.90 6.12 3.04 N.A. 6.10 8.38 11.39 N.A. 0.13 1.08 0.87 0.58 0.48 0.23 2.05 0.85 0.96 0.67 0.74 0.24 0.51 2.69 2.60 6.34 7.08 70.55 12.16 23.47 8.94 9.15 9.54 18.17 25.66 0.56 1.65 0.88 0.94 0.87 76.00 6.80 141.48 444.05 271.39 0.37 0.40 0.42 0.38 0.39 40.84 119.88 121.64 77.83 87.89 1.67 2.21 3.10 1.53 2.93 0.28 N.A. 0.61 0.81 0.67 0.19 1.72 1.41 1.38 0.19 0.05 2.99 2.80 1.91 1.58
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Latin America Non-Financial Institutions Corporate Financial Statistics (Continued)
Company Name AES Andres Dominicana SPV (Aes Dominicana) Alto Palermo S.A. (APSA) Arcor S.A.I.C. Arendal, S. de R. L. de C. V. Axtel, S.A.B. de C.V. Bio-PAPPEL, S.A.B. de C.V. Cablevision S.A. Capex S.A. Ceagro Agricola Ltda. Celulosa Argentina S.A. CEMEX, S.A.B. de C.V. Cimento Tupi S.A. Clarendon Alumina Production Limited (CAP) Compania de Transporte de Energia Electrica en Alta Tension Transener S.A. Compania Latinoamericana de Infraestructura y Servicios Construtora OAS Ltda Corporacion Pesquera Inca SAC (COPEINCA) Cresud S.A.C.I.F. y A. Digicel Group Limited Empresa Generadora de Electricidad Haina, S.A. Empresa Generadora de Electricidad Itabo, S.A. GOL Linhas Aereas Inteligentes S.A. Grupo Famsa, S.A.B. de C.V. Grupo Posadas, S.A. de C.V. Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda) Industrias Metalurgicas Pescarmona S.A. (IMPSA) Inversiones y Representaciones S.A. Maestro Peru S.A. Marfrig Alimentos S.A. Minerva S.A. OAS S.A. OGX Petroleo E Gas Participacoes S.A. Pan American Energy LLC Petroleos de Venezuela S.A. (PDVSA) Rede Energia S.A. Rodopa Industria e Comercio de Alimentos Ltda. SANLUIS Rassini, S.A. de C.V. Servicios Corporativos Javer, S.A.P.I. de C.V. Siderurgica del Turbio, S.A. (Sidetur) Sifco S.A. Telecom Argentina S.A. Transportadora de Gas del Norte S.A. (TGN) Transportadora de Gas del Sur S.A. (TGS) Urbi Desarrollos Urbanos, S.A.B. de C.V. Virgolino de Oliveira S/A Acucar e Alcool WPE INTERNATIONAL Cooperatief U.A. YPF S.A.
a LTM. N.A. Not applicable. Source: Fitch Ratings.
LTM as of June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 May 2012 June 2012 June 2012 March 2011 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 March 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 Dec. 2011 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012 June 2012
Short-Term Debt/Total Debt (x) 2009 2010 2011 0.03 0.25 0.43 0.92 0.10 0.01 0.10 0.03 0.29 0.38 0.03 0.48 0.28 0.09 0.30 0.13 0.27 0.38 0.11 0.03 N.A. 0.19 0.91 0.19 0.13 0.19 0.25 0.55 0.29 0.24 0.26 1.00 0.25 0.14 0.22 0.47 218 0.10 0.18 0.20 0.93 1.00 0.01 0.49 N.A. 0.19 0.69 N.A. 0.23 0.28 0.98 0.06 0.02 0.06 0.10 0.07 0.40 0.03 0.48 0.24 0.09 0.40 0.23 0.07 0.55 0.04 0.09 N.A. 0.09 0.82 0.04 0.14 0.20 0.37 0.35 0.32 0.14 0.25 0.95 0.22 0.14 0.29 0.67 208 0.01 0.10 0.39 0.26 1.00 0.01 0.30 0.46 0.20 0.79 N.A. 0.16 0.36 0.75 0.03 0.03 0.11 0.09 0.22 0.49 0.02 0.17 0.40 0.03 0.51 0.21 0.18 0.39 0.09 0.17 N.A. 0.31 0.77 0.09 0.16 0.20 0.28 0.42 0.23 0.26 0.26 0.00 0.25 0.07 0.44 0.62 41 0.03 0.06 0.42 0.14 1.00 0.01 0.43 0.31 0.20 0.64
2012a N.A. 0.11 0.33 0.93 0.03 0.03 0.15 0.11 0.21 0.45 0.01 0.15 N.A. 0.02 0.46 0.17 0.28 0.28 0.05 0.16 N.A. 0.12 0.79 0.44 0.14 0.24 0.22 0.53 0.28 0.12 0.26 0.01 0.40 N.A. 0.46 0.81 50 0.02 0.06 0.48 0.23 1.00 0.01 0.18 0.30 0.24 0.93
Total Net Debt with Equity Credit/ Operating EBITDA (x) 2009 2010 2011 1.19 3.73 1.10 6.93 2.21 2.60 1.30 4.45 1.59 4.87 6.61 0.89 (29.47) 2.96 1.16 0.14 2.21 3.60 3.92 3.65 0.65 3.08 6.16 3.46 5.21 4.92 2.49 2.61 3.20 4.30 3.54 21.79 0.89 1.31 5.34 1.04 5.71 1.67 0.40 8.00 (0.12) 4.28 0.64 0.84 N.A. 4.92 0.40 0.27 1.42 1.59 4.06 2.83 2.65 0.92 5.06 0.20 3.20 7.26 1.79 (25.74) 2.25 1.68 (6.04) 2.42 2.12 3.66 1.22 (10.45) 1.80 7.33 5.13 3.35 5.06 1.77 1.94 4.21 4.33 8.14 9.72 0.92 0.78 5.74 2.48 4.01 2.40 1.19 5.61 (0.27) 6.05 0.59 1.22 3.85 5.06 0.36 0.18 0.74 1.41 1.57 3.10 3.87 1.14 4.09 2.25 2.33 8.18 3.69 (10.86) 3.85 1.56 (1.73) 2.06 2.92 4.26 0.87 2.81 13.62 8.72 6.24 3.67 4.39 2.71 3.09 4.78 4.14 6.53 0.93 0.45 1.41 5.40 2.04 2.55 3.82 0.86 4.92 (0.48) 16.96 1.51 2.15 4.94 4.39 0.81
2012a 0.06 0.70 1.31 0.35 3.43 2.46 1.05 5.66 2.56 2.52 7.17 5.51 N.A. 15.50 1.92 9.12 2.24 3.79 4.25 1.28
1.80 1,381.70 7.94 5.77 3.17 N.A. 2.48 3.05 4.62 4.22 13.56 (2.35) 0.74 N.A. 5.77 2.27 2.39 3.46 0.41 4.95 (0.37) 27.35 1.31 3.04 7.83 N.A. 0.67
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AES Andres Dominicana, Ltd.
(AES Dominicana)
Full Rating Report
Ratings
Foreign Currency Long-Term Issuer Default Rating Senior Unsecured B B
Key Rating Drivers

High Risk Sector: The Dominican Republic power sector is characterized by low collections from end users and high electricity losses. Such conditions have undermined distribution companies (DISCOs) cash flow generation, leaving them dependent on government subsidies to honor their accounts payable to the Dominican generation companies. This links the credit quality of the distribution and generation companies in the country to that of the sovereign. Transition Risk Diminishes: The incumbent partys electoral victory in the presidential elections held during May 2012 partially diminishes the political uncertainty that had prevailed during the first half of the year. For AES Dominicana, the results lowered the risk of noncontinuous policies aimed at strengthening the financial viability of the Dominican electricity sector, as agreed to under the last IMF Standby agreement that expired in February 2012. Key political measures needed to achieve a financially viable sector in the medium term include a gradual adjustment to tariffs, increases in the DISCOs cash recovery index (CRI) to 70% from the historical lows of 50%, and the reduction of days receivables from generating companies to a 60-day average. Solid Portfolio of Assets: AES Dominicanas ratings reflect its high quality assets, consisting of Andres and DPP. These plants have an aggregate generating capacity of 540 MW. Andres ranks among the lowest cost electricity generators in the country. Its combined-cycle plant burns natural gas and is expected to be fully dispatched as a base-load unit as long as the liquefied natural gas (LNG) price is not more than 15% higher than the price of imported fuel oil No. 6. Well Structured PPAs: The companys operating profits are healthy due to well-structured U.S. dollar-denominated power purchase agreement (PPA) with EDE Este, a Dominican distribution company. The increase in the participation of nonregulated users in its client base and its income diversification strategy, which is achieved through incremental sales of natural gas also support the ratings. AES Dominicana owns the only LNG import terminal in the country with a storage and daily transportation capacity of 160,000 m3 and 6,000 m3 respectively. Strong Stand-Alone Credit Profile: AES Dominica has a strong standalone credit profile for the rating category. The company generated USD173 million of EBITDA during the LTM ended March 31, 2012. Its EBITDA margin was 37.6%. With only USD168 million of total debt, AES Dominicanas leverage, as measured by total debt to EBITDA, is low at 0.9x. Volatile Cash Flow Generation: Annualized CFFO was USD45 million as of March 31, 2012, well below the CFFO during fiscal 2011 of USD63 million, showing relative deterioration in account receivable collections from distribution companies during the first quarter of 2012 (58%) with respect to the fiscal 2011 collection performance of 70%. Still, the company shows strong liquidity with cash on hand of USD128 million as of March 31, 2012 and no short-term debt. Debt service coverage with respect to EBITDA stood at a strong 9.7x.
Rating Outlook
Long-Term Foreign Currency Issuer Default Rating Positive
Financial Data
AES Andres Dominicana Ltd. (USD Mil.) Total Assets Total Equity Net Income EBITDA Total Debt LTM 3/31/12 935,575 612,299 78,316 173,436 164,076 12/31/11 880,405 605,815 85,611 183,411 164,012
Analysts
Julio Ugueto +58 212 286-3356 julio.ugueto@fitchratings.com Lucas Aristizabal +1 312 368-3260 lucas.aristizabal@fitchratings.com
What Could Trigger a Rating Action

Drivers: Lower dependence of the sector on government subsidies could lead to a rating upgrade. The ratings would also be positively affected by a positive rating action on the sovereign.
Latin America High Yield November 8, 2012 14
Corporates
Recovery Analysis
AES Dominicanas senior notes issuance has been assigned a recovery rating of RR4. The recovery was based upon the treatment of AES Dominicana as a going concern, as a liquidation scenario is considered highly unlikely. The ratings have been capped at RR4 due to concerns about the low probability of high recoveries for bondholders of corporates domiciled in the Dominican Republic. Fitch currently maintains a positive outlook for the sovereign, and, as such, we do not foresee a bankruptcy scenario for AES Dominicana unless a low probability event, such as a severe fiscal crisis that impacts the companys cash flow to a point that its liquidity is constrained. As a result we have opted for estimating a distressed enterprise valuation to arrive at the recovery scenario attached below. The distressed EBITDA is calculated to cover the companys fixed charges and critical maintenance capex, which is then adjusted by a conservative 5x multiple to arrive at a distressed company valuation. This distressed valuation would be associated with a severe fiscal crisis that would lead to a sustained cash flow drain for all generating companies in the country and contemplates the low probability event of a nonfriendly renegotiation scenario of the companys PPAs with distribution companies to the detriment of AES Dominicana. In this hypothetical scenario, it would be reasonable to expect a low demand for the companys assets under a competitive bidding process, further supporting the distressed valuation commented above.
Recovery Analysis AES Dominicana

(USD Mil.) IDR: Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Distressed EBITDA Multiple (x) Going Concern Enterprise Value B 173.4 83.9 28.0 5.0 140.0
Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien
18 10
Distribution of Value by Priority Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims
140.0 14.0 126.0
Value Recovered
Recovery (%)
Recovery Rating
Notching
Rating
Unsecured Priority Issuer Default Rating Senior Unsecured Subordinated Junior Subordinated Source: Fitch.
Amount Outstanding 164
Value Recovered 126
Recovery (%) 77
Concession Allocation (%)
Recovery Rating RR2
Notching +2
Rating B BB
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Corporates
Organization Structure AES Dominicana
The AES Corporation IDR B+ (100% Equity Owner)
AES Andres BV Operating Subsidiary (100% Equity Owner)
Dominican Power Partners Operating Subsidiary
AES Andres Dominicana LTD IDR B Senior Unsecured Debt Outstanding (USD Mil.) 168
Source: AES Dominicna.
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Corporates
Debt and Covenant Synopsis AES Andres Dominicana LTD. (AES Dominicana)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) (x) Interest Coverage (Minimum) (x) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction AES Andres Dominicana AES Andres B.V. & Dominican Power Partners Nov. 12, 2010 Nov. 12, 2020 Senior Unsecured Notes
3.5 2.25 Change of control clause at 101% of principal. Generally permits asset sales as long as it is divested at least equal to fair market value, the company receives at least 75% cash payment and the proceeds are used to reduce debt or are reinvested. The issuer is not allowed to incur additional debt. The guarantor is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. The guarantors can incur additional indebtedness in an aggregate principal amount not to exceed USD30 million. AES Dominicans guarantors are not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. The issuer is not permitted to pay any dividends or make any other distribution to its shareholders, except for dividends payable solely in their capital stock. The guarantors are not permitted to make any restricted payments if, among other clauses, it cannot incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceeds 100% of combined net income. None. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include but are not limited to: breach of any covenant, if the interest reserve is not fully funded for more than fifteen days and if the issuer, either guarantor or any restricted subsidiary, defaults in any indebtedness of at least USD20.0 million. As of March 31, 2011, AES Andres had USD413 million of intercompany subordinated debt with its shareholder that amortizes Dec. 31, 2016. This debt accrues interest at an annual rate of 9.125%, which can be paid under certain conditions, or else capitalized at December 31 of each year. The issuer is allowed to redeem the notes in whole or in part at a preset redemption price.
Limitation on Secured Debt Restricted Payments
Other Cross Default Acceleration
Intercompany Loans Restriction on Purchase of Notes
Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
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Corporates
Financial Summary AES Andres Dominicana Ltd.
(USD Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 3/31/12 173,436 173,436 38 38 9 (4) 26 3.9 9.7 9.7 9.7 9.7 3.9 (0.1) 7.0 1.5 2.4 0.9 0.2 0.9 0.2 0.2 935,575 127,703 164,076 164,076 164,076 164,076 612,299 776,375 51,802 (6,460) 45,342 (29,742) (35,903) (20,303) 7,978 2 (1,045) (13,368) 461,351 4 146,515 17,872 78,316 2011 183,411 183,411 41 41 14 0 15 6.4 10.9 10.9 10.9 10.9 6.4 0.9 8.7 2.2 1.5 0.9 0.2 0.9 0.2 0.1 880,405 131,130 164,012 164,012 164,012 164,012 605,815 769,827 90,649 (27,823) 62,826 (28,617) (35,903) (1,694) 14,179 7 (1,014) 11,478 444,386 18 157,343 16,800 85,611 2010 161,900 161,900 43 43 13 21 19 4.4 7.8 7.8 7.8 7.8 4.4 4.9 10.7 7.6 1.8 1.0 0.3 1.0 0.3 0.3 853,356 119,652 163,773 163,773 163,773 163,773 559,193 722,966 70,285 22,857 93,142 (12,273) 80,869 (16,277) (3,492) (3,279) 57,821 376,738 0151 135,414 20,625 53,823 2009 82,438 82,438 35 35 7 (3) 1 1.9 3.4 3.4 2.8 2.8 1.9 0.6 2.8 0.7 3.5 2.0 1.2 2.0 1.2 0.1 0.0 713,062 63,040 5,000 156,000 161,000 161,000 161,000 458,304 619,304 20,957 (3,616) 17,341 (23,479) (6,138) 51,571 (20,000) (1,286) 24,147 234,536 (35) 66,900 24,399 3,493 2008 112,253 112,253 31 31 9 (5) 5 2.9 5.6 5.6 2.5 2.5 2.9 0.0 0.9 (1.7) 3.1 1.6 1.3 1.6 1.3 0.1 0.1 718,418 40,450 25,000 156,000 181,000 181,000 181,000 454,676 635,676 37,850 (49,343) (11,493) (6,743) (18,236) 12,155 9,596 (1,473) 2,042 358,249 26 97,500 19,910 21,378
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Corporates
Alto Palermo S.A. (APSA)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B B+/RR3 BB
Key Rating Drivers

Linkage to IRSA and Argentina: While debt at Alto Palermo S.A. (APSA) is low in relation to cash flow, Fitch Ratings has linked the credit quality of APSA with its more highly leveraged parent company, IRSA Inversiones y Representaciones S.A. (IRSA). APSAs foreign currency IDR continues to be constrained at B by the B country ceiling assigned to Argentina by Fitch. Its local currency (LC) issuer default rating (IDR) is constrained at BB due to the high degree of risk associated with operating in Argentinas real estate industry. Devaluation Risk: Devaluation risk is also present for APSA as most of its cash flow is denominated in Argentine pesos and a substantial part of its debt is in U.S. dollars. This risk is partially mitigated by APSAs dollar-denominated asset portfolio and its long-term debt profile. Strong Business Position: APSAs BB LC IDR is supported by the companys strong market position in the Argentine shopping center industry. APSA operates 13 shopping centers with a gross leasable space of 309,021 square meters. The high quality of these malls and their strategic locations result in sales per square meter that exceed the market average and occupancy rates of more than 98%. Hedge Against Consumer Inflation: APSAs revenues are partially hedged against consumer inflation, as the company receives a percentage of the sales made by tenants of its malls. The companys high operating margins are due to leases that result in the tenants paying direct expenses and a percentage of the common expenses. Cyclical Business: APSAs results are closely correlated with the performance of the economy, which has proven to be quite volatile. APSA shows some concentration in the nearterm for its lease agreements (33% of lease contracts expiring in 2013), as the contracts are generally for 36 months. While this ratio is high for the industry, APSAs strong market position allows it to renew contracts updating leasing terms. Diversified Asset Base: For the real estate industry, the emphasis of Fitch's methodology is on portfolio quality and diversity, and size of the asset base. APSAs portfolio of assets is strong, with an undepreciated book capital as of June 30, 2012 of USD629 million. These assets are mostly unencumbered, as secured debt represents less than 5% of total debt. The companys leverage, as measured by net debt as a percentage of undepreciated book capital, was 17% as of June 30, 2012. This percentage would be even lower at market values. The large pool of unencumbered assets at APSA provides financial flexibility and results in aboveaverage recovery prospects in the event of default.
Rating Outlooks
Long-Term Foreign Currency IDR RWN Long-Term Local Currency IDR Stable RWN Rating Watch Negative.
Financial Data
Alto Palermo S.A. (USD Mil.) Revenue EBITDA Cash Flow from Operations (CFFO) Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) CFFO/Net Debt (x) 6/30/12 214.7 165.5 143.3 31.1 172.5 0.8 0.7 1.3 6/30/11 214.1 147.7 130.0 41.8 147.6 1.0 0.7 1.2

Analysts
Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com Jose Vertiz +1 212 908-0641 jose.vertiz@fitchratings.com
Changes Affecting APSAs Conservative Financial Structure: The Stable Outlook reflects Fitchs expectations that APSA will manage its balance sheet to a targeted ratio of debt-toEBITDA of about 1.5x and interest coverage to be above 5.0x. Fitch estimates that the companys EBITDA margin will remain above 70%. Any significant increase in APSAs targeted leverage ratio would threaten credit quality and could result in a negative rating action. Changes in Argentinas Country Ceiling: APSAs foreign currency (FC) IDR would be affected by an upgrade or downgrade of the Argentine country ceiling of B.
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Corporates
Recovery Rating
The recovery ratings for APSAs capital market debt instruments reflect Fitchs expectation that the companys creditors would have above-average recovery prospects in the event of a default. The recovery analysis anticipates a complete recovery for senior unsecured bond holders. The notching was capped at RR3, which resulted in a one-notch uplift from the FC IDR. The notching above the soft cap of RR4 for bonds issued by Argentine corporates reflects the companys very strong credit profile and its ability to continue to operate should a potential economic and political crisis occur in Argentina. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is consistent with the value observed on the Buenos Aires stock exchange during the last year.
Recovery Analysis Alto Palermo S.A. (APSA)

(USD Mil.) Available to Creditors 45.6 0.9 69.9 116.4 Going Concern Enterprise Value June 30, 2012 FYE EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
165.5 25 124.1 4.0 496.5 16.2 8.2 24.4 496.5 49.7 446.9
31.1 57.0 1.7 349.7 439.5
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims
446.9 446.9 22.3 424.5
Distribution of Value Secured Priority Senior Secured Value Recovery Recovered Recovery (%) Rating Notching Rating Value Concession Recovery Unsecured Priority Lien Recovered Recovery (%) Allocation (%) Ratinga Notching Rating Senior Unsecured 172.4 172.4 100 100 RR3 +1 B+/RR3 a In accordance with Fitch Ratings country-specific treatment of recovery ratings, the recovery ratings of Argentine corporates are capped at RR4. The strong profile of APSA has resulted in its one-notch rating uplift from the RR4 threshold. Note: Numbers may not add due to rounding. Source: Fitch Ratings. Lien
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Corporates
Organizational Structure Alto Palermo S.A.
Summary Statistics LTM June 30, 2012 USD165.5 Million of EBITDA USD31.1 Million of Cash and Marketable Securities USD140.7 Million of Total Debt
Alto Palermo S.A. USD120 Million Senior Unsecured Notes due 2017
Rents and Services 100% 100% 100% 100% 100% 100% 100% 100% 100% 53.68% 80% 98.14% 99.99% 100% Patio Bullrich Alto Avellaneda Paseo Alcorta Abasto Alto Rosario Alto NOA Alto Palermo Mendoza Plaza Shopping Villa Cabrera ERSA PAMSA Shopping Neuquen FIBESA S.A. Soleil Factory 100% 100% 100% 20% 95%
Consumer Financing Tarshop Apsamedia 100% 100% 100% 100%
Other Torodur S.A. Patio Olmos Torres Rosario Espacio Aereo Coto/Soleil Arcos del Gourmet Nuevo Puerto Santa Fe Other
88.18% 50%
Buenos Aires Design DOT Proyecto Neuquen
Source: Fitch and Alto Palermo S.A.s public information.
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Corporates
Debt and Covenant Synopsis Alto Palermo S.A. (APSA)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Leverage (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Alto Palermo S.A. N.A. April 20, 2007 2017; Notes issued under USD400 million program Senior Unsecured Notes N.A. N.A. Change-of-control clause at 101% of principal. See Limitations on Consolidation or Mergers or Assets Sale The issuer is not allowed to incur additional debt except permitted debt, unless the consolidated interest coverage exceeds 1,75x. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations; guarantees; derivatives as long as used for hedging purposes; debt to finance the acquisition of assets related to the core business of the company, as long as it is below 5% of total consolidated tangible assets; debt related to labor claims; short term bank debt related to the normal course of business. The issuer shall not assume any lien upon its assets (with the exception of 'permitted liens') unless at the same time the obligations of the company under the notes are secured equally. With several exceptions, the issuer and restricted subsidiaries are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes under certain conditions. Restrictions on merger or consolidation of issuer. Exceptions include: 1) the merger of other entities with the issuer provided that surviving entity will be the issuer; 2) if any entity formed by such merger is organized and validly under existing laws, and the surviving entity assumes responsibility towards the debt service of the existing notes. Transactions with affiliates are permitted as long as the terms of the transaction are not substantially less favorable than those that could be achieved with a non-related party. This limitation does not apply to certain transactions with subsidiaries; management, directors and other fees; loans to directors, employees or any subsidiary, that are related to the core business and do not exceed USD1 million.
Limitation on Liens Restricted Payments Other Limits on Consolidations or Mergers or Assets Sale Transactions with Affiliates
N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Alto Palermos public information and Fitch Ratings.
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Corporates
Financial Summary Alto Palermo S.A. (APSA)
Period-End Exchange Rate Average Exchange Rate (USD 000, Fiscal Years Ended June 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/(Interest Expense + Rental Expenses) Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow (FCF) Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Source: Fitch and Alto Palermo S.A.s public information. 4.5238 4.3012 2012 165,548 77.1 43.2 31.3 32.4 10.0 10.2 10.2 4.8 4.8 10.0 2.4 3.3 7.9 0.9 0.8 0.7 0.8 0.7 9.2 0.1 550,063 31,124 18,172 154,290 172,462 31,769 140,693 0 140,693 215,852 356,546 145,850 (2,502) 143,349 0 (18,081) (58,079) 67,189 0 (40,376) (36,645) 631 (470) (9,671) 214,735 0.3 138,799 16,165 76,221 4.1100 3.9998 2011 147,754 69.0 39.3 26.0 26.1 7.9 7.2 7.2 3.0 3.0 7.9 1.5 2.4 10.1 0.9 1.0 0.7 1.0 0.7 10.1 0.2 565,931 41,814 29,590 149,757 179,347 31,755 147,592 0 147,592 254,296 401,888 141,845 (11,790) 130,055 0 (12,920) (61,473) 55,662 0 (896) (31,935) 202 0 23,034 214,128 4.9 118,414 20,488 65,148 3.9317 3.8458 2010 114,622 56.2 20.2 1.8 12.9 3.8 5.0 5.0 1.5 1.5 3.8 0.4 0.6 2.3 2.0 1.5 1.4 1.5 1.4 9.8 0.2 631,928 17,527 51,963 172,481 224,444 47,220 177,224 0 177,224 244,501 421,725 63,872 (31,296) 32,576 0 (13,997) (14,862) 3,716 0 17,481 (21,456) 1,412 0 1,154 204,086 18.4 83,338 23,048 30,969 3.799 3.7279 2009 49,202 28.5 17.3 (34.6) (2.2) 4.3 2.8 2.8 0.6 0.6 4.3 (0.5) (0.3) 0.3 2.6 4.0 3.7 4.0 3.7 7.0 0.3 645,305 16,988 62,075 182,188 244,263 47,203 197,060 0 197,060 233,855 430,915 58,359 (35,411) 22,948 0 (66,360) (16,159) (59,571) 0 (17,535) 8,718 12,886 0 (55,501) 172,366 (15.9) 24,203 17,627 (5,918) 3.0235 3.1247 2008 76,548 37.4 17.6 (24.9) 8.6 5.6 4.9 4.9 1.4 1.4 5.6 (0.7) 1.1 0.6 2.4 2.7 1.5 2.7 1.5 6.2 0.0 0.1 738,248 95,213 38,293 219,051 257,344 47,252 210,092 0 210,092 306,319 516,411 72,078 (18,279) 53,799 0 (86,463) (18,270) (50,934) 0 (22,555) (3,607) 6,998 0 (70,097) 204,869 30.8 51,912 15,701 25,593 3.0905 3.0861 2007 72,630 46.4 13.7 (5.3) 7.4 6.7 7.2 7.2 2.0 2.0 6.7 0.0 4.3 1.1 3.0 2.7 0.6 2.7 0.6 6.2 0.0 0.1 677,467 159,227 27,137 219,625 246,762 47,266 199,496 0 199,496 289,706 489,202 57,051 1,182 58,233 0 (51,137) (15,419) (8,323) 0 (8,544) 155,908 0 0 139,041 156,583 30.0 50,075 10,024 20,757
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Corporates
Financial Summary Alto Palermo S.A. (APSA)
(ARS 000, Fiscal Years Ended June 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/(Interest Expense + Rental Expenses) Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Source: Fitch and Alto Palermo S.A.s public information. 2012 712,053 77.1 43.2 31.3 32.4 10.0 10.2 10.2 4.7 4.7 10.0 2.4 3.3 7.9 0.9 0.9 0.7 0.9 0.7 9.2 0.0 0.1 2,488,374 140,801 82,206 697,979 780,185 143,717 636,468 0 636,468 976,473 1,612,941 627,331 (10,760) 616,571 0 (77,769) (249,810) 288,992 0 (173,667) (157,616) 2,716 (2,023) (41,598) 923,618 7.8 597,003 69,527 327,842 2011 590,985 69.0 39.3 26.0 26.0 7.9 7.2 7.2 2.9 2.9 7.9 1.5 2.3 10.1 0.9 1.0 0.7 1.0 0.7 10.1 0.0 0.2 2,325,978 171,856 121,615 615,503 737,118 130,515 606,603 0 606,603 1,045,155 1,651,758 567,352 (47,159) 520,193 0 (51,676) (245,879) 222,638 0 (3,582) (127,734) 808 0 92,130 856,468 9.1 473,631 81,949 260,578 2010 440,814 56.2 20.2 1.8 12.9 3.8 5.0 5.0 1.5 1.5 3.8 0.4 0.6 2.3 2.1 1.6 1.4 1.6 1.4 9.8 0.0 0.2 2,484,550 68,910 204,303 678,145 882,448 185,653 696,795 0 696,795 961,303 1,658,098 245,639 (120,360) 125,279 0 (53,829) (57,158) 14,292 0 67,229 (82,515) 5,432 0 4,438 784,873 22.1 320,500 88,638 119,102 2009 183,421 28.5 17.3 (34.6) (2.4) 4.3 2.8 2.8 0.6 0.6 4.3 (0.5) (0.3) 0.3 2.6 4.1 3.7 4.1 3.7 7.7 0.0 0.3 2,451,515 64,537 235,824 692,134 927,958 179,324 748,634 0 748,634 888,417 1,637,051 217,555 (132,008) 85,547 0 (247,384) (60,238) (222,075) 0 (65,367) 32,499 48,039 0 (206,904) 642,565 0.4 90,227 65,713 (22,060) 2008 239,191 37.4 17.6 (24.9) 8.8 5.6 4.9 4.9 1.5 1.5 5.6 (0.7) 1.1 0.6 2.3 2.7 1.5 2.7 1.5 6.4 0.0 0.1 2,232,093 287,875 115,778 662,302 778,080 142,865 635,215 0 635,215 926,156 1,561,371 225,223 (57,116) 168,107 0 (270,171) (57,088) (159,152) 0 (70,477) (11,272) 21,868 0 (219,033) 640,154 32.5 162,208 49,061 79,970 2007 224,144 46.4 13.7 (5.3) 7.4 6.7 7.2 7.2 2.0 2.0 6.7 0.0 4.3 1.1 3.0 2.8 0.6 2.8 0.6 6.2 0.0 0.1 2,093,711 492,092 83,868 678,752 762,620 146,076 616,544 0 616,544 895,336 1,511,879 176,064 3,648 179,712 0 (157,815) (47,584) (25,687) 0 (26,368) 481,148 0 0 429,093 483,231 33.7 154,538 30,935 64,057
24
Corporates
Arcor S.A.I.C.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B+ B+/RR4 BB
Key Rating Drivers

Strong Business Position: Arcor S.A.I.C.s (Arcor) BB local currency issuer default rating (IDR) reflects the companys strong business position as a leading Latin American producer of confectionary and cookie products. Arcor enjoys strong brand equity in Argentina due to its comprehensive distribution network and its presence in the country for more than 60 years. Foreign Currency IDR Above Country Ceiling: Arcors presence extends beyond Argentina due to exports to 120 countries and its production facilities in Chile, Brazil, Mexico, and Peru. Arcors exports and operations outside of Argentina (30% of total consolidated revenues) partially mitigate the risks of foreign exchange controls in Argentina. They have resulted in a foreign currency IDR of B+ for Arcor, which is one notch higher than the B country ceiling that Fitch has assigned to Argentina. Cash Flow Concentration in Argentina: Arcors BB local currency IDR considers the high correlation of its cash flow with the Argentine economic cycle. While Arcors operations in investment-grade countries such as Brazil and Chile account for nearly 30% of its consolidated revenues, the contribution to cash flow generation from operations in these countries is still low. About 85% of Arcors operating cash flow is generated in Argentina. Ample Liquidity and Low Leverage: The company generated a positive cash flow from operations of USD161 million during 2011 and had cash and equivalents of USD99 million. As of Dec. 31, 2011, Arcors short-term debt was USD160 million. Funds from operations adjusted leverage decreased to 1.4x from 1.9x in Dec. 31, 2010. Cash flow is generally high in relation to capital expenditures and consistently maintains a positive trend.
Rating Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR RWN Rating Watch Negative. RWN Stable
Financial Data
Arcor S.A.I.C. IFRS 3/30/12 253.3 30.1 7.7 25.5 420.5 3.5 3.3 12.8 Local GAAP 12/31/11 3.051.6 257.3 161.7 98.8 446.9 1.7 1.4 0.5
(USD Mil.) Revenue EBITDA Cash Flow from Operations (CFFO) Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) CFFO/Net Debt (x)

Changes Affecting Financial Structure: The Stable Outlook reflects Fitchs expectations that Arcor will manage its balance sheet to a targeted debt-to-EBITDA ratio of around 2.0x. Under a conservative scenario, Fitch estimates the companys interest coverage to be more than 4.0x. A significant increase in Arcors targeted leverage ratio would weaken credit quality and could result in a negative rating action. Conversely, the local currency IDR could be positively affected by a better than expected cash flow generation or better than expected operating results from subsidiaries in investment-grade countries. Changes in Argentinas Country Ceiling: Arcors foreign currency IDR could be affected by an upgrade or downgrade of Argentinas B country ceiling.
Analysts
Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com
25
Corporates
Recovery Rating
Arcors recovery rating of RR4 indicates that the companys creditors would have an average recovery prospect in the range of 31%50% of current principal and related interest in the event of default. This rating reflects a recovery rating cap for Argentine issuers of RR4. Fitch has estimated the enterprise valuation in the event of financial distress. This analysis considers that any debt default by Arcor would likely be the result of the imposition of foreign exchange or transfer controls and that the companys operations would remain viable. As a result, Fitch has not performed a liquidation analysis in the event of bankruptcy. The bespoke recovery analysis of Arcors debt suggests recovery levels consistent with the RR1 category.
Recovery Analysis ARCOR S.A.I.C.

(USD Mil.) IDR: Going Concern Enterprise Value EBITDA as of Dec. 31, 2011 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value B+ 257 25 193 6.0 1,158
Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 5.0
42.3 30.0 72.3
Value Recovered 5
Recovery (%) 100
Recovery Rating RR1
Notching
Rating B+
Value Recovered 413.6 Recovery (%) 100 0 0 0 Concession Allocation (%) 100 0 0 0 Recovery Rating RR1
Unsecured Priority Senior Unsecureda Unsecured Subordinated Junior Subordinated
Lien 413.6 0.0 0.0 0.0
Notching
Rating B+
a The recovery ratings of Argentine corporates are soft capped at RR4. Source: Fitch.
26
Corporates
Organizational Structure Arcor S.A.I.C.
Grupo Arcor S.A. 99.7% December 2011 Summary Statistics: USD257.3 Mil. of EBITDA USD98.8 Mil. of Cash and Marketable Securities USD446.8 Mil. of Total Debt TD/EBITDA: 1.7x ND/EBITDA: 1.4x Arcor S.A.I.C. TD: USD387.6 Mil. Others 0.3%
99.98% Arcor do Brasil TD: USD33.1 Mil.
51.00% Bagley Latinoamerica
99.99% Ind. Alim. DEU
99.99% Cartocor TD: USD4.2 Mil.
99.99% La Campagnola TD: USD5.6 Mil.
99.99% Unidad Mexico
99.29% Bagley Argentina
99.99% Bagley do Brasil TD: USD3.7 Mil.
99.99% Bagley Chile
99.98% Cartocor Chile TD: USD5.9 Mil.
99.00% Converflex Arg.
50.00% Mundo Dulce
TD Total debt. ND Net debt. Source: ARCOR S.A.I.C and Fitch.
27
Corporates
Debt and Covenant Synopsis Arcor S.A.I.C.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Limitation on Sale of Restricted Subsidiaries Debt Restriction Additional Debt Restriction Arcor S.A.I.C. N.A. Oct. 26, 2010 2017 Senior Unsecured Notes
N.A. N.A. Change of control clause at 101% of principal. The company will not and will not permit any restricted subsidiary transfer, convey, lease, sell, or dispose of any voting stock of any restricted subsidiary, except: to the company or to other restricted subsidiary; in compliance with covenants Limitation on Sales of Assets, Limitation on Restricted Payments. The company will not and will not permit any restricted subsidiary to incur in any indebtedness (other than Permitted Debt). Exceptions are: 1) on the date of such incurrence, the fixed charge coverage ratio would be no less than 3x and 2) no default or event of default shall have occurred. The company will not and will not allow its restricted subsidiaries to enter into a transaction with affiliates, unless: 1) the transaction is on terms that are no less favorable than those that would have been obtained in a comparable transaction with a Person that is not an affiliate; 2) the company delivers to the trustee for transactions in excess of USD15 million, a resolution from its board of directors. The company or its restricted subsidiaries will not enter into any sale and lease back transactions unless pursuant to the provisions of the covenant described under 'limitation on Indebtedness'.
Other Transactions with Affiliates
Sale and Leaseback Transactions
FQE Fiscal quarter-end. FYE Fiscal year-end. N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
28
Corporates
Financial Summary Arcor S.A.I.C.
(USD 000, As of Dec. 31) Period-End Exchange Rate Average Exchange Rate Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) FCF Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/(Interest Expense + Rental Expenses) Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 4.3786 4.2098 LTM 3/31/12 30,067 11.9 2.5 2.1 0.3 2.5 0.3 0.4 1.2 2.9 3.5 3.3 13.4 0.4 1,182,687 25,549 164,216 256,256 420,472 420,472 0 420,472 546,061 966,533 21,866 (14,163) 7,703 0 (6,319) 0 1,384 98 (10,417) 1,451 0 (7,485) 253,229 0.0 26,114 14,529 0 32,560 4.3053 4.1295 2011 257,266 257,266 8.4 0.1 28.4 (0.3) 19.8 7.5 6.2 6.2 1.3 1.3 7.5 0.2 0.7 1.3 1.4 1.7 1.4 1.7 1.4 0.1 0.4 1,624,727 98,813 159,814 287,054 446,868 446,868 0 446,868 602,404 1,049,272 268,865 (107,141) 161,724 0 (129,327) (41,424) (9,027) 26,813 (3,408) (80,425) (13,238) 0 (79,284) 3,051,623 18.0 210,253 41,538 0 115,226 3.9787 3.9134 2010 195,213 195,213 7.5 7.5 24.3 (0.1) 18.8 8.2 6.2 6.2 1.1 1.1 8.2 0.2 1.3 1.7 1.9 2.5 1.6 2.5 1.6 6.9 0.3 1,595,457 189,194 139,003 355,437 494,440 494,440 0 494,440 560,462 1,054,902 228,911 (115,089) 113,822 0 (68,229) (47,643) (2,051) 3,456 363 49,190 (38,301) 0 12,658 2,586,336 19.9 151,151 31,614 0 107,048 3.7990 3.7279 2009 212,969 212,969 9.9 9.9 30.2 7.7 16.4 9.0 6.2 6.2 1.0 1.0 9.0 0.9 1.8 7.4 1.4 2.0 1.1 2.0 1.1 8.0 0.4 1,378,776 185,098 177,286 238,068 415,354 415,354 0 415,354 580,076 995,430 272,439 (56,792) 215,647 0 (29,286) (20,387) 165,975 3,082 (6,460) (57,145) (2,528) 0 102,924 2,156,440 -4.4 165,121 34,104 0 91,117 3.4538 3.1631 2008 209,562 209,562 9.3 9.3 22.1 0.5 11.6 6.5 5.8 5.8 0.9 0.9 6.5 0.2 0.6 1.5 1.9 2.1 1.6 2.1 1.6 8.9 0.4 1,339,669 92,213 188,174 245,486 433,660 433,660 0 433,660 530,193 963,853 196,890 (110,175) 86,715 0 (56,286) (19,518) 10,912 3,187 1,580 31,956 (1,401) 0 46,235 2,256,580 20.8 151,844 35,851 0 61,708
29
Corporates
Financial Summary Arcor S.A.I.C.
(ARS 000, As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) FCF Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/ (Interest Expense + Rental Expenses) Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 3/31/12 131,042 131,042 11.9 2.5 2.1 0.3 2.5 0.3 0.4 1.2 2.9 3.5 3.3 13.5 0.4 5,178,515 111,870 719,038 1,122,042 1,841,080 1,841,080 1,841,080 2,390,981 4,232,061 95,302 (61,730) 33,572 (27,541) 6,031 429 (45,403) 6,322 (32,621) 1,103,672 113,814 63,322 141,909 2011 1,062,379 1,062,379 8.4 0.1 28.4 (0.3) 19.7 7.5 6.2 6.2 1.2 1.2 7.5 0.2 0.7 1.3 1.5 1.8 1.4 1.8 1.4 0.1 0.4 6,994,938 425,420 688,048 1,235,853 1,923,901 1,923,901 1,923,901 2,593,529 4,517,430 1,110,279 (442,438) 667,841 (534,055) (171,061) (37,275) 110,726 (14,072) (332,114) (54,668) (327,403) 12,601,676 24.5 868,240 171,531 475,824 2010 763,947 763,947 7.5 7.5 24.3 (0.1) 18.9 8.2 6.2 6.2 1.1 1.1 8.2 0.2 1.3 1.7 1.9 2.6 1.6 2.6 1.6 7.0 0.3 6,347,845 752,746 553,052 1,414,176 1,967,228 1,967,228 1,967,228 2,229,910 4,197,138 895,819 (450,390) 445,429 (267,006) (186,448) (8,025) 13,525 1,422 192,500 (149,887) 49,535 10,121,366 25.9 591,514 123,719 418,922 2009 793,928 793,928 9.9 9.9 30.2 7.7 16.8 9.0 6.2 6.2 1.0 1.0 9.0 0.9 1.8 7.4 1.4 2.0 1.1 2.0 1.1 8.3 0.4 5,237,969 703,188 673,508 904,420 1,577,928 1,577,928 1,577,928 2,203,710 3,781,638 1,015,626 (211,714) 803,912 (109,175) (76,000) 618,737 11,490 (24,083) (213,030) (9,425) 383,689 8,038,991 12.6 615,556 127,136 339,676 2008 662,866 662,866 9.3 9.3 22.1 0.5 11.1 6.5 5.8 5.8 0.9 0.9 6.5 0.2 0.6 1.5 2.0 2.3 1.8 2.3 1.8 8.5 0.4 4,626,948 318,484 649,916 847,859 1,497,775 1,497,775 1,497,775 1,831,179 3,328,954 622,784 (348,495) 274,289 (178,037) (61,737) 34,515 10,081 4,998 101,081 (4,430) 146,245 7,137,788 22.6 480,298 113,399 195,189
30
Corporates
Arendal, S. de R.L. de C.V. (Arendal)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Local Currency Long-Term IDR IDR Issuer default rating. B B
Key Rating Drivers

Recent Ratings Upgrade: Arendal, S. de R.L. de C.V.s ratings were upgraded on Sept. 7, 2012 to reflect its strengthened credit profile due to an improvement in its main credit metrics associated with higher operating and EBITDA margins, which in turn were translated into positive cash flow from operations in the last 30 months, as well as positive free cash flow generation in the last 18 months. During 2011 and 2012, Arendal has been developing the construction of a federal penitentiary in the state of Chiapas, which has diversified the companys revenue source, as well as allowed it to increase operative margins compared to past years. Nevertheless, Fitch Ratings expects that margins will decline in 2013 and 2014 due to the nature of future projects. The ratings are limited by industry factors, which are highly linked to economic cycles, project concentration of revenues and cash flow, as well as the current process to strengthen corporate governance practices. Small Company with Volatile Liquidity Position: Arendal is a relatively small company that makes fluid transportation systems and plants in Mexicos heavy construction industry. The companys financial strategy is to secure its debt with the cash from projects, resulting in almost all of its debt concentrated in the short term. This makes the companys ability to continue to operate highly dependent on managements efforts to obtain new projects and financing. Tight liquidity also heightens the risk of mismanaging working capital. Industry Constraints: Fitch believes Mexicos heavy construction industry is exposed to economic cycles, which is reflected in the volatility of sales and operating margins throughout the years. Arendals main long-term challenge is the ongoing need to add new projects. Underdeveloped Corporate Governance: Fitch believes that Arendals corporate governance is below average due to issues such as: the participation of key executives in business operations, a lack of independent members in the board of directors, and alternative overseeing committees, as well as multiple related-party transactions. Stable Profitability: During the last five years, the company has grown organically through the cycle. Revenues reported by the company in 2011 were MXN1.3 billion, and operating income was MXN237 million. The compounded annual growth rate (CAGR) of revenues and operating income during the last five years were 17% and 52%, respectively. These factors reflect managements commitment and ability to adjust its operating and business strategies despite an unfavorable economic environment.
Rating Outlooks
Long-Term Foreign Currency IDR Stable Long-Term Local Currency IDR Stable
Financial Data
Arendal, S. de R.L. de C.V. (MXN Mil.) Total Debt Revenue EBITDA EBITDA Margin (%) Total Debt/ EBITDA (x) EBITDA/Interest Expenses (x) LTM 6/30/12 510 2,477 498 20.1 1.0 6.2 12/31/11 492 1,263 255 20.2 1.9 5.6

Stronger Credit Metrics and Liquidity: A combination of stronger credit metrics, an improved liquidity position, and better corporate governance could lead to a positive rating action. Analysts
Indalecio Riojas +52 81 8399-9100 indalecio.riojas@fitchratings.com Alberto de los Santos +52 81 8399-9100 alberto.delossantos@fitchratings.com
Weak Operating Performance: The ratings could be negatively pressured by a combination of the following factors, among others: deterioration of Arendals credit metrics as a result of a downturn in the heavy construction industry or a decline in its operative performance. Large scale projects that are more complex and not in Arendals current areas of expertise could demand additional resources from the company than originally anticipated. A rating downgrade could also be driven by limited access to financing sources affecting the companys liquidity position.
31
Corporates
Organizational Structure Arendal, S. de R.L. de C.V.
(MXN Million, As of June 30, 2012)
Arendal, S. de R.L. de C.V. Foreign Currency IDR B Local Currency IDR B Credit Facilities for Projects Financial Leases Total Debt 501.3 8.7 510.0
76.0%
99.9%
99.9%
99.9%
MAKOBIL, S. de R.L. de C.V.
ARB Arendal Servicios, S.A. de C.V.
ARB Arendal Construcciones, S.A. de C.V.
Aspica, S. de R.L. de C.V.
These three companies provide and manage the personnel services to the sites and corporate offices.
Source: Company reports and Fitch estimates.
32
Corporates
Axtel S.A.B. de C.V.
Full Rating Report
Ratings
Foreign Currency Local Currency Senior Unsecured National B B B/RR4 BB(mex)
Key Rating Drivers

High Leverage: Fitch Ratings downgraded Axtel on June 24, 2012, reflecting the pressure over the companys leverage due to weak operating performance, which resulted in leverage increasing above Fitchs previous expectation of 3.5x. Fitch expects a total debt-to-EBITDA ratio of around 4.0x by year end. Changes in leverage should be linked either to the MXN fluctuation or to operating issues. Underperforming Long-Distance Continues: The decrease in international long-distance (ILD) service prices and volumes continue to affect revenue and EBITDA generation. ILD services are expected to remain under pressure. The company continues making an effort to mitigate the impact to EBITDA generation by adjusting their 2012 capex to close to USD150 million from USD190 million. Recapitalization Options: The company announced that it is exploring different alternatives to improve its financial position. Among them are the sale of noncore assets, including the sale and leaseback of towers, an increase in capital, and a joint venture in a particular business. In the short term, it is likely that efforts should be centered on the sale of noncore assets. Strategy Focused on Broadband and ICT Services: Axtels strategy aims to strengthen its service portfolio with a bundle offering of high-end broadband to both residential and corporate customers, as well as Information and Communications Technology (ICT) services to both users. Axtel seeks to mitigate voice revenue reduction and strengthen its competitive position by increasing EBITDA generation from the corporate segment, which is less competitive than the residential market. Weakened Liquidity Position: Axtels liquidity position has weakened but is partially offset by its manageable debt maturity profile, as its next sizeable maturity is in 2017. As of June 30, 2012, the company had a cash balance of MXN693 million, down from MNX1,425 million for year-end 2011. This cash position compares to short-term maturities of MXN355 million and LTM FFO of MXN2,750 million. If the company manages to reduce debt, cash flow that was used for debt service and payments can be used for capex. Favorable Regulatory Rulings: Recent regulatory rulings have favored Axtels cost structure. Nevertheless, ILD prices were down more than expected during the first quarter of 2012, affecting operating results. Axtel has a disagreement regarding mobile interconnection rates with Telcel and international long-distance settlements with Telmex that could result in a liability to Axtel of MXN3,219 million. A negative outcome may result in a nonrecurring expense for Axtel and could negatively affect its credit quality.
Rating Watch
Foreign Currency Long-Term Rating Negative Local Currency Long-Term Rating Negative National Long-Term Rating Negative
Financial Data
Axtel S.A.B. de C.V. (MNX Mil.) Revenue Operating EBITDAR Operating EBITDAR/ Revenues (%) FFO Cash Flow from Operations FCF FFO/Interest Expense Net of Interest Income (x) Total Debt Total Adjusted Debt with Equity Credit Total Adjusted Debt/Operating EBITDAR (x) Adjusted Leverage/FFO (x) Operating EBITDAR/Debt Service Coverage (x) 6/30/12 10,672 3,866 30.7 1,948 1,660 (606) 2.8 11,923 16,663 4.3 4.6 1.9 12/31/11 10,829 4,142 38.3 2,349 2,312 (220) 3.3 12,511 17,054 4.1 4.4 2.1

Analysts
Sergio Rodriguez, CFA +52 81 8399-9100 sergio.rodriguez@fitchratings.com Natalia OByrne +57 1 326-9999 natalia.obyrne@fitchratings.com
Key Rating Drivers: The Negative Rating Watch is pending on the result of Axtels success in divesting noncore assets. If successful, the proceeds will be used primarily for payment of onbalance sheet debt and, to a lesser extent, for capital expenditures. The inability to improve its liquidity position or stabilize operating performance, or a MXN devaluation that results in total debt to EBITDA approaching 4.5x, could also result in further negative rating actions.
33
Corporates
Recovery Analysis
RR4 rated securities have characteristics consistent with securities, historically recovering 31%50% of current principal and related interest, which is average given default.
Recovery Analysis Axtel S.A.B. de C.V.

(MXN Mil.) IDR: B Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Available to Rate (%) Creditors 0 80 1,988.90 50 62.2 20 2,986.9 5,038 Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 0 0 Value Recovered 0 0 Recovery (%) 0 0 Recovery Rating 0 0 Notching 0 0 Rating 0 0 3,274.20 50 1,637.10 3.0 4,911.30 693.6 2,486.10 124.4 14,934.7 18,238.8
1,062 592 1,654
Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims
5,038.00 503.80 4,534.20
4,534.2 4,534.2 226.7 4,307.5 Value Recovered 4,307.5 Recovery (%) 0 36 Concession Allocation (%) 100 0 Recovery Rating RR4
Unsecured Priority Senior Unsecured Unsecured Source: Fitch.
Lien 0.0 11,923.3
Notching 0
Rating B
34
Corporates
Organizational Structure Axtel S.A.B. de C.V. and Subsidiaries
(MXN Mil.)
Consolidated Debt EBITDA Debt to EBITDA (x) 11,923 3,274 3.6
Axtel S.A.B. de C.V.
Instalaciones Contrataciones, S.A. de C.V.

Source: Fitch and Axtel.
Servicios Axtel, S.A. de C.V.
Avantel, S. de R.L. de C.V.
Avantel Infraestructura S. de R.L. de C.V.
Telecom Network, Inc.
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Corporates
Debt and Covenant Synopsis Axtel S.A.B. de C.V.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Axtel S.A.B. de C.V. 9/22/09 9/22/19 Senior Unsecured Notes guaranteed by all subsidiaries with the exception of Telecom Networks.
Consolidated Leverage (Maximum) The company and the subsidiary guarantors consolidated leverage ratio cannot exceed 4.0 to 1.0. Acquisitions/Divestitures Change of Control Upon the occurrence of any a change of control event, each holder of the notes shall have the right to require that Axtel repurchase the notes Provision at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest. The purchase date shall be no earlier than 30 days or later than 60 days from the date of the notice. Events considered a change of control are: (1) any person, other than one or more permitted holders, is or becomes the beneficial owner such person shall be deemed to have beneficial ownership of all shares that any such person has the right to acquire, whether this right is exercisable immediately or only after the passage of time and such person shall not be deemed to have beneficial ownership of any shares solely as a result of a voting or similar agreement entered into in connection with a merger agreement or asset sale agreement), directly or indirectly, of more than 35% of the total voting power of Axtels voting stock. (2) Individuals who on Sept. 22, 2009 constituted the board of directors cease for any reason to constitute a majority of the board of directors. (3) The adoption of a plan relating to the liquidation or dissolution of Axtel. (4) The merger or consolidation of the Axtel with or into another person or the merger of another person with or into Axtel, or the sale of all or substantially all the assets of the company to another Person other than a transaction in which holders of securities that represented 100% of the Voting Stock of the company. Sale of Assets Restriction Axtel will not, and will not permit any restricted subsidiary to, directly or indirectly, consummate any asset disposition unless: (1) the company or such restricted subsidiary receives consideration at the time of such asset disposition at least equal to the fair market value, as determined in good faith by the Board of Directors, of the shares and assets subject to such asset disposition; (2) except in the case of a permitted asset swap, at least 75% of the consideration thereof received by the Axtel or such restricted subsidiary is in the form of cash or cash equivalents; and (3) an amount equal to 100% of the net available cash from such asset disposition is applied by the company to prepay, repay, redeem, purchase, defease or otherwise acquire senior indebtedness of Axtel or indebtedness or repay any Indebtedness that was secured by the assets sold in such asset disposition, in each case within one year from the later of the date of such asset disposition or the receipt of such net available cash, to the extent the company elects, to acquire additional assets within one year from the later of the date of such asset disposition or the receipt of such net available cash or to make an offer to the holders of the notes and to holders of other senior indebtedness of Axtel to purchase the notes. Certain Covenants Limitation on Liens Axtel will not, and will not permit any restricted subsidiary to, directly or indirectly, incur or permit to exist any lien of any nature whatsoever on any of its properties, whether owned at Sept. 22, 2009 or thereafter acquired, securing any indebtedness, other than permitted liens, without effectively providing that the notes shall be secured equally and ratably with the obligations so secured for so long as such obligations are so secured. Limitation in The company will not, and will not permit any restricted subsidiary to, incur, directly or indirectly, any indebtedness; provided, however, that Indebtedness Axtel and the subsidiary guarantors will be entitled to incur indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro forma basis the consolidated leverage ratio would be less than 4.0 to 1. Notwithstanding the company and the restricted subsidiaries will be entitled to incur any or all of the following Indebtedness: (1) indebtedness owed to and held by the company or a wholly owned subsidiary; (2) the existing notes, other than any additional notes; (3) indebtedness outstanding on Sept.22, 2009; (4)refinancing indebtedness in respect of indebtedness incurred, (5) hedging obligations consisting of interest rate agreements directly related to indebtedness or hedging obligations relating to currency agreements, (6) Obligations in respect of performance, bid and surety bonds and completion guarantees provided by Axtel or any restricted subsidiary in the ordinary course of business, (7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; (8) purchase money obligations and capital lease obligations, in an aggregate principal amount at any time outstanding not exceeding an amount equal to 10% of consolidated total assets; (9) indebtedness consisting of the subsidiary guaranty of a subsidiary guarantor and any guarantee by a subsidiary guarantor of indebtedness incurred to the extent the refinancing indebtedness incurred there under directly or indirectly refinances indebtedness incurred; (10) indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets provided that (a) any amount of such obligations included on the face of the balance sheet of the company or any restricted subsidiary shall not be permitted under this clause and (b) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause shall at no time exceed the gross proceeds actually received; and (11) indebtedness of the company or of any of its restricted subsidiaries in an aggregate principal amount which, when taken together with all other indebtedness of the company and its restricted subsidiaries outstanding on the date of such incurrence does not exceed USD30 million. Limitation on Sale and Axtel will not, and will not permit any restricted subsidiary to, enter into any sale/leaseback transaction with respect to any property unless: (1) Leaseback the company or such restricted subsidiary would be entitled to (a) incur indebtedness in an amount equal to the attributable debt with respect to such sale/leaseback transaction pursuant to the covenant described under Limitation on Indebtedness and (b) create a lien on such property securing such attributable debt without equally and ratably securing the notes pursuant to the covenant described under Limitation on Liens; (2) the net proceeds received by the company or any restricted subsidiary in connection with such sale/ leaseback transaction are at least equal to the fair market value of such property; and (3) the Axtel applies the proceeds of such transaction in compliance with the covenant described under Limitation on Sale of Assets and Subsidiary Stock. N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis Axtel S.A.B. de C.V. (Continued)
(Foreign Currency Notes) Certain Covenants (Continued) Limitation on Sale of Axtel will not, and will not permit any restricted subsidiary to, sell, lease, transfer or otherwise dispose of any capital stock of any restricted Assets and Subsidiary subsidiary to any person (other than the company or a wholly owned subsidiary), and will not permit any restricted subsidiary to issue any of its Stock capital stock (other than, if necessary, shares of its Capital Stock constituting directors or other legally required qualifying shares) to any person (other than to the company or a wholly owned subsidiary). Limits on Consolidations Axtel will not consolidate with or merge with or into, or convey, transfer, or lease, in one transaction or a series of transactions, directly or or Mergers indirectly, all or substantially all its assets to, any person, unless: (1) the resulting, surviving or transferee person or Successor Company shall be a person organized and existing under the laws of the United Mexican States or the laws of any political subdivision thereof, the laws of the United States of America, any State thereof or the District of Columbia, or the European Union or any of its member nations and the successor company (if not the company) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the trustee, in form satisfactory to the trustee, all the obligations of the predecessor company under the notes and the Indenture; (2) immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the successor company or any subsidiary as a result of such transaction as having been Incurred by such successor company or such subsidiary at the time of such transaction), no default shall have occurred and be continuing; (3) immediately after giving pro forma effect to such transaction, the successor company would be able to incur an additional US$1.00 of indebtedness pursuant to paragraph (a) of the covenant described under Limitation on Indebtedness; (4) the company shall have delivered to the trustee an officers certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture; (5) the company shall have delivered to the trustee an opinion of counsel to the effect that the holders will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such transaction and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred; and (6) Axtel shall have delivered an opinion of counsel in the United Mexican States to the effect that the holders will not recognize income gain or loss for income tax purposes of such jurisdiction as a result of such transaction and will be subject to income tax in such jurisdiction on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred. N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
37
Corporates
Financial Summary Axtel S.A.B. de C.V.
(MXN 000, As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 3,274,188 3,866,664 30.7 36.2 16.4 (5.7) (39.6) 2.8 3.1 2.3 2.3 1.9 2.2 0.3 0.8 0.7 4.6 3.6 3.4 4.3 4.1 9.7 3.0 21,194,428 693,593 355,810 11,567,479 11,923,289 11,923,289 4,739,808 16,663,097 5,322,286 21,985,383 1,948,914 (288,465) 1,660,449 0 (2,267,415) 0 (606,966) 0 (73,921) 229,981 0 (891,109) (1,342,015) 10,672,129 (0.9) 209,369 1,062,071 592,476 (2,571,236) 2011 3,574,585 4,142,481 33.0 38.3 17.2 (2.0) (30.3) 3.3 3.6 2.6 2.6 2.1 2.5 0.6 1.6 0.9 4.4 3.5 3.1 4.1 3.8 8.7 3.0 22,277,272 1,425,023 380,880 12,130,494 12,511,374 12,511,374 4,543,168 17,054,542 5,740,146 22,794,688 2,349,429 (36,724) 2,312,705 0 (2,532,772) 0 (220,067) 0 (81,185) 260,904 0 (1,024,460) (1,064,808) 10,829,405 1.7 437,487 1,002,580 567,896 (2,042,922) 2010 3,227,780 3,746,515 30.3 35.2 15.7 (10.5) (3.6) 3.2 3.5 2.6 2.0 1.8 2.4 (0.1) 0.7 0.7 4.2 3.2 2.8 3.9 3.5 9.2 6.3 22,408,580 1,308,264 655,996 9,772,835 10,428,831 10,428,831 4,149,880 14,578,711 7,734,294 22,313,005 2,049,242 194,221 2,243,463 0 (3,361,220) 0 (1,117,757) 0 (103,191) 1,088,282 0 38,690 (93,976) 10,651,961 (2.9) 240,783 933,347 518,735 (286,029) 2009 3,838,580 4,322,519 35.0 39.4 19.7 (5.6) 2.2 4.1 4.1 3.1 2.1 1.8 3.1 0.2 0.9 0.8 3.2 2.6 2.2 3.2 2.9 9.5 9.5 21,603,082 1,402,240 944,553 8,947,650 9,892,203 9,892,203 3,871,512 13,763,715 8,200,933 21,964,648 2,909,459 (846,435) 2,063,024 0 (2,674,436) 0 (611,412) 0 (326,603) 777,967 219,662 58,629 118,243 10,968,877 (5.2) 772,782 925,261 483,939 176,400 2008 4,210,402 4,624,745 36.4 40.0 21.6 (0.5) (8.4) 5.1 5.3 3.8 3.8 3.1 3.7 0.7 1.7 1.0 2.9 2.3 2.0 2.8 2.6 9.3 3.1 21,569,161 1,105,576 296,106 9,358,464 9,654,570 9,654,570 3,314,744 12,969,314 7,931,417 20,900,731 3,295,568 647,383 3,942,951 0 (4,000,615) 0 (57,664) 0 (19,267) 215,842 (277,666) (27,973) (166,728) 11,572,401 (5.1) 1,354,563 801,687 414,343 (700,324)
38
Corporates
Bio PAPPEL S.A.B de C.V.
Full Rating Report Key Rating Drivers
B B/RR4 B
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating.
Leading Market Position: Bio PAPPEL S.A.B de C.V. (Bio-PAPPEL) is the largest paper and packaging company in Mexico with some operations in the U.S., and 1.3 million tons of sales during 2011. The main paper and packaging products manufactured and sold by Bio-PAPPEL are corrugated containers, containerboard, newsprint, multiwall sacks and bags, uncoated free sheet paper, and kraft paper. As the largest producer of these products in Mexico, the company has a diversified customer base. Weak Debt Repayment Record: Bio-PAPPEL has restructured its debt twice over the last 12 years (in 2002 and 2008). A key driver of these debt restructurings was the companys vulnerability to high costs for raw materials and energy. While the company has made efforts to improve its cost structure and decrease its vulnerability to costs that are outside of its control, Bio-PAPPEL is currently vulnerable to rising recycled fiber prices, as well as those for electricity and natural gas. Mixed Operating Environment: The global economic environment during the past few years has resulted in relatively high energy and recycled fiber prices, while the Mexican economy has performed relatively well. The confluence of these factors has translated into a stable performance by Bio-PAPPELs packaging division and a rebound in the performance of its paper division. Combined, these factors have led to growth in the companys EBITDA to MXN935 million for the LTM ended June 30, 2012 from a low of MXN285 million during 2008. At the end of June 2012, Bio-PAPPEL had MXN1.1 billion of cash and marketable securities and MXN3.4 billion of total debt. Financing of Customers: Many of Bio-PAPPELs customers are small and are not able to obtain financing from banks at attractive rates and terms. As a result, the company tends to have very large account receivables balances relative to EBITDA, as it essentially acts as a lender for some of its customers.
Rating Outlooks
Financial Data
Bio Pappel S.A.B. de C.V. (MXN Mil.) Revenue EBITDA Total Debt Gross Interest Expense Debt/EBITDA (x) EBITDA/ Gross Interest Expense (x) LTM 6/30/12 12,023 964 3,389 302 3.5 3.2 2011 11,008 769 3,939 284 5.1 2.7
Note: LTM 2Q12 data is LTM IFRS.

Diminishing the Debt Burden: A positive factor for credit quality would be a reduction of the issuers debt burden, which could reduce leverage variability under changing EBITDA levels. Stabilizing Price Cost Spread: The successful widening and stabilization of the spread between price and cost per ton, thus making EBITDA generation more constant, would be positive for creditworthiness. Conversely, a consistent weakening of the price versus cost unit spread would be considered negative for credit quality. Analysts
Miguel Guzman Betancourt +52 81 8399-9100 miguel.guzman@fitchratings.com Alberto de los Santos +52 81 8399-9100 alberto.delossantos@fitchratings.com
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Corporates
Recovery Rating
Because of the issuers restructuring track record, we do not envision a liquidation scenario for Bio-PAPPEL in the event of financial distress. Consequently, a liquidation analysis was not performed. The most likely scenario would be a negotiated restructuring of the debt, as was done in 2002 and 2008. In deriving a distressed enterprise valuation to determine the recovery under this scenario, we discounted the companys LTM EBITDA to historical lows, which in the past have triggered restructuring efforts. We then applied a 6x distressed EBITDA multiple, which is conservative for the industry and reflects the harsh industry environment that would result in restructuring proceedings.
Recovery Analysis Bio-PAPPEL S.A.B de C.V.

(MXN Mil.) IDR: Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value B 964.3 70 289.3 6.0 1,735.7
Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 120.7 258.1
284.2 65.0 349.2
1,735.7 173.6 1,562.1
Value Recovered 120.7 258.1
Recovery (%) 100 100
Recovery Rating RR3 RR3
Notching +1 +1
Rating B+ B+
1,562.1 378.8 1,183.3 59.2 1,124.2 Value Recovered 1,183.3 Recovery (%) 39 Concession Allocation (%) 100 Recovery Rating RR4
Unsecured Priority Senior Unsecured Source: Bio-PAPPEL S.A.B de C.V.
Lien 3,010.5
Notching 0
Rating B
40
Corporates
Organizational Debt Structure Bio Pappel S.A.B. de C.V.
(As of 2Q12)
Bio Pappel, S.A.B. de C.V. Senior Notes due 2016 Bancomer Notes Payable GE 99.96% Porteadores de Durango, S.A. de C.V. 99.99% Bio Pappel Nacional, S.A. de C.V. MXN2,970 Mil. MXN40 Mil. MXN221.3 Mil. MXN119 Mil. 99.99% Bio Servicios Corporativos, S.A. de C.V. 99.7%a 100.00% Bio Pappel International Inc. Notes Payable MXN0.3 Mil.
99.99% Reciclajes Centauro, S.A. de C.V.
Lineas Areas Ejecutivas de Durango, S.A. de C.V.
99.62%
Bio Pappel Packaging, S.A. de C.V. GE MXN1.3 Mil. Notes Payable MXN36.5 Mil.
52.64%b
Bio Pappel Inmobiliaria, S.A. de C.V.
99.99% 99.99% Bio Pappel Printing, S.A. de C.V. 99.99% 99.99% Bio Servicios Printing, S.A. de C.V.
Bio Servicio de Empaques, S.A. de C.V. Bio Servicios de Papel Kraft, S.A. de C.V.
a0.3%
is controlled through Bio-Pappel. b47.35 % is controlled through Bio Pappel Nacional. Source: Bio Pappel S.A.B. de C.V.
41
Corporates
Debt and Covenant Synopsis Bio-PAPPEL, S.A.B. de C.V.
(As of Dec. 31, 2009) Overview Issuer Guarantors Corporacin Durango, S.A.B. de. C.V. (renamed Bio Pappel, S.A.B. de C.V.) Each direct and indirect subsidiary of Bio Pappel, S.A.B. de. C.V. including: Porteadores de Durango, S.A. de C.V., Reciclajes Centauro, S.A. de C.V., Administracin Corporativa de Durango, S.A. de C.V. (ACD) (renamed Bio Servicios Corporativos, S.A. de. C.V.) Lneas Areas Ejecutivas de Durango, S.A. de C.V. Empaques de Cartn Titn, S.A. de C.V. (Titn) (renamed Bio Pappel Packaging, S.A. de C.V.) Inmobiliaria Industrial Tizayuca, S.A. de C.V. (renamed Bio Pappel Inmobiliaria, S.A. de C.V.) Servicios Industriales Tizayuca, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Atenmex, S.A. de C.V., Atensa, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Ectsa Industrial, S.A. de C.V. (renamed Bio Servicios de Empaques, S.A. de C.V.) Eyemsa Industrial, S.A. de C.V. (merged into Bio Servicios de Empaques, S.A. de C.V.) Cartonpack Industrial, S.A. de C.V. (Cartnpack) (merged into Bio Servicios de Empaques, S.A. de C.V.) Administracin Industrial Centauro, S.A. de C.V. (merged into Bio Servicios de Papel Kraft, S.A. de C.V.) Administradora Industrial Durango, S.A. de C.V. (renamed Bio Servicios de Papel Kraft, S.A. de C.V.) Ponderosa Industrial de Mxico, S.A. de C.V. (PIMSA) (recently sold) Mexpape, S.A. de C.V. (renamed Bio Servicios Printing, S.A. de C.V.) Fapatux, S.A. de C.V. (merged into Bio Pappel Printing, S.A. de C.V.), Servicios Pipsamex, S.A. de C.V. (merged into Bio Servicios Printing, S.A. de C.V.) Formatodo Industrial, S.A. de C.V. (merged into Bio Servicios Printing, S.A. de C.V.) Paper International, Inc. (merged into Bio Pappel International, Inc.) Fiber Management of Texas, Inc. (merged into Paper International, Inc which was later merged into Bio Pappel International, Inc.) Grupo Pipsamex, S.A. de C.V. (renamed Bio Pappel Printing, S.A. de. C.V.) McKinley Paper Company (renamed Bio Pappel International, Inc.) Summafibers Inc. (merged into Bio Pappel International, Inc.) Empresas Titn, S.A. de C.V. (merged into Bio Pappel Packaging, S.A. de. C.V.) Compaa Norteamericana de Inversiones en Celulosa y Papel, S.A. de C.V. (merged into Bio Pappel Inmobiliaria, S.A. de C.V.) Aug. 27, 2009 Aug. 27, 2016 Senior Guaranteed Notes
Document Date Maturity Date Description of Debt Financial Covenants Consolidated Leverage (Maximum) N.A. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change-of-Control Provision Change-of-control clause at 101% of principal. Sale of Assets Restriction Neither the issuer nor guarantors can sell assets other than: 1) worn or obsolete assets with an aggregate value of less than USD100,000; 2) asset sales in the ordinary course of business; or 3) asset sales in which the net proceeds are used to repay the notes. If the issuer or the guarantors sell capital stock of their subsidiaries, the net proceeds must be used to repay the notes. A fairness opinion is needed if an equity issuance or asset sale of capital stock of a note issuer involves more than 5% of its capital stock, or if more than 1% if the capital stock is sold to an affiliate, obligor, or other related entity of any guarantor. Debt Restrictions Additional Debt Restriction Neither the issuer nor guarantors are allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. The issuer or its subsidiaries can incur or maintain up to USD30 million of additional indebtedness through 2012. This figure then escalates annually, reaching USD60 million by 2016. (Debt thresholds shall not be cumulative.) Debt can also be incurred for finance trade receivables in connection with hedging agreements and in respect to certain intercompany loans under certain conditions. Limitation on Secured Debt Beyond customary permitted liens, subject to certain conditions, Durango or its subsidiaries may incur liens: 1) securing permitted indebtedness provided that liens in respect of such refinanced debt existed prior to such refinancing and do not extend beyond the collateral securing such debt prior to its refinancing, 2) arising out of letters of credit, or 3) arising out of the sale of goods; 4) statutory liens; 5) arising from ordinary course transactions and activities. Restricted Payments With certain exceptions, the issuer or guarantors are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes, as well as the making of deposits or loans with certain defined persons and entities. The investment restrictions also identify certain financial instruments that the company can invest in, such as commercial paper of highly rated entities. N.A. Not applicable. Continued on next page. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
42
Corporates
Debt and Covenant Synopsis Bio PAPPEL, S.A.B. de C.V. (Continued)
Other Cross Default Acceleration Cross default when an uncured event of default occurs for debt of more than USD10 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Holders of the majority of the outstanding notes may rescind a declaration of acceleration within 60 days. PIK Interest Rate The interest rate for notes is 6% during the first year, 7% during years two through four, and 10% during the fifth, sixth, and seventh year. During the first two years, 3% of the coupon can be paid with a PIK coupon, and during the third year 2% of the coupon can be paid with a PIK coupon. Intercompany Loans Intercompany loans are subordinated. Restriction on Purchase of The issuer, guarantor, or affiliates may purchase notes at par provided the notes shall be retired or pledged. Notes purchased shall have no Notes voting rights to the extent permitted by law in bankruptcy or any other situation. Transactions with Affiliates Transactions between issuer or guarantors and affiliates for more than USD100,000 shall require a fairness opinion. Limits on Consolidations or Restrictions on merger or consolidation of issuer and guarantors. Exceptions include: 1) the merger of guarantors; 2) the merger of other Mergers entities with the issuer provided that surviving entity will be the issuer or another corporation existing under the laws of Mexico or the U.S., and that no event of default occurs or is continuing, the companys pro forma net worth increases, and that the companys debt be rated at least B+ prior to the merger and is affirmed at B+ or higher; or 3) the merger of other entities with a guarantor provided that surviving entity will be the guarantor or another corporation existing under the laws of Mexico or the U.S., that no event of default occurs or is continuing, the companys pro forma net worth increases, and that the companys debt rating be at least B+ prior to the merger and is affirmed at B+ or higher. Any surviving entity would assume all obligations of the issuer or guarantor under the indenture. Mandatory Redemption The note will be redeemed on a pro rata basis if an issuer or guarantor sells assets with a value of at least USD5 million or greater than USD10 million during a 180-day period through a series of lesser sales. Notes will also be automatically redeemed if equity is issued, using 85% of net cash proceeds. N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
43
Corporates
Financial Summary Bio PAPPEL, S.A.B. de C.V.
(MXN Mil.) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debta Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income
a
IFRS LTM 6/30/12 964,281 1,127,882 8.0 9.4 11.4 4.6 (1.7) 5.1 3.2 2.4 2.3 1.9 3.7 2.0 4.6 2.0 2.6 3.5 2.4 4.0 3.0 9.9 0.0 0.0 16,649,218 1,094,455 118,338 3,270,949 3,389,287 0 3,389,287 1,145,207 4,534,494 9,102,457 13,636,951 1,247,299 (170,630) 1,076,669 910,457 (529,138) 0 547,531 38,790 87,795 (12,346) 0 (245,994) 415,776 12,022,597 0.0 650,716 301,565 163,601 (153,196)
2011 768,597 911,763 7.0 8.3 7.1 0.7 (0.9) 2.8 2.7 2.1 1.9 1.6 2.2 0.9 3.2 1.2 5.2 5.1 3.9 5.4 4.4 7.8 0.0 0.0 16,387,047 966,970 125,944 3,813,312 3,939,256 3,939,256 1,002,162 4,941,418 8,548,715 13,490,133 523,466 (39,982) 483,484 0 (404,688) 0 78,796 37,151 1,603 (9,511) 0 124,129 232,168 11,008,110 (2.8) 406,254 284,496 143,166 (73,207)
Mexican GAAP 2010 2009 1,004,078 1,252,024 8.9 11.1 9.9 (1.6) 4.6 4.6 4.2 2.6 3.1 2.2 2.8 0.2 2.4 0.7 3.8 3.4 2.7 4.1 3.5 7.1 0.0 0.0 16,036,596 734,802 81,475 3,314,383 3,395,858 3,395,858 1,735,622 5,131,480 8,531,632 13,663,112 860,879 (360,489) 500,390 0 (687,194) 0 (186,804) 4,348 (4,282) (808) 0 (55,526) (243,072) 11,321,693 10.1 674,850 240,617 247,946 385,781 931,953 1,148,881 9.1 11.2 7.4 4.0 28.7 6.8 8.4 3.5 6.1 3.1 3.0 3.4 9.8 3.2 5.1 3.6 2.6 4.3 3.4 2.1 0.0 0.0 15,009,789 977,874 42,101 3,356,487 3,398,588 3,398,588 1,518,496 4,917,084 8,164,089 13,081,173 645,114 (45,533) 599,581 0 (189,864) 0 409,717 2,015 (1,042) (100,680) (6,782) (98,440) 204,788 10,287,521 0.7 567,726 111,431 216,928 1,587,859
2008 285,061 462,754 2.8 4.5 9.8 (2.4) (62.2) 1.4 0.4 0.5 0.0 0.1 1.3 0.1 0.2 (0.6) 7.6 25.4 22.7 18.3 16.7 10.2 0.0 1.0 15,465,831 773,086 7,094,194 151,743 7,245,937 7,245,937 1,243,851 8,489,788 2,911,181 11,400,969 260,830 (354,961) (94,131) 0 (155,787) 0 (249,918) 377,747 51,855 (185,612) 151,154 87,296 232,522 10,217,378 0.9 (111,092) 677,121 177,693 (2,544,262)
Off-balance sheet debt based on gross rental expense (see Related Criteria). Source: Fitch.
44
Corporates
Cablevision S.A.
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B B/RR4 B+
Negative Outlook: Fitch Ratings revised Cablevision S.A.s Rating Outlook to Negative from Stable on July 5, 2012. The Negative Outlook stems from a weakening of the companys operating position as a result of restrictions on the import of key products and materials. As a result of the weak operating environment, Cablevision has limited headroom to improve its operational performance. Fitch believes that the companys credit quality is likely to come under pressure should the unfavorable regulatory and operating environment persist. Conservative Leverage Is a Key Credit Consideration: Fitch expects that the company will maintain a conservative capital structure to mitigate existing operational and regulatory risks. As of March 31, 2012, Cablevisions total consolidated debt was USD648 million, similar to year-end 2011, with a manageable maturity schedule. In the short term, the restrictions to trade would cause credit protection metrics to strengthen, as capex is delayed from previous forecasts, with net leverage trending below 1.0x and gross leverage around 1.5x. High Regulatory and Political Risk Among Others: Fitch believes the weak and hostile regulatory framework has prevented the company from achieving its goals in terms of service clustering and triple-play offering. This has affected Cablevisions business model and growth potential. Other credit concerns include the evolving competitive landscape, costs pressures derived from double-digit inflation, and currency mismatch between Cablevisions pesodenominated cash flow generation and its dollar-denominated debt. Cablevisions foreign currency issuer default rating is capped by Argentines country ceiling of B, while its Recovery Rating of RR4 is constrained by the soft cap of RR4 for bonds issued by Argentine corporates. Competitive Position Could Be Affected: Cablevisions solid business position is derived from a comparatively stronger subscriber clustering profile and service penetration rates. The companys ability to maintain its competitive position relative to the joint services offered by incumbents and direct broadcast satellite operators is threatened by restrictions upon its access to import key products, as well as a law that intends to nullify the merger with Multicanal. Stable Operating Track Record: Cablevision has leveraged its scale by offering various digital services coupled with strategic bandwidth initiatives that helped it improve average revenue per user (ARPU), maintain operating margins and subscriber loyalty, while lowering subscriber churn levels. For the three-month period ended March 31, 2012 and for the year ended Dec. 31, 2011, the companys revenues and EBITDA remain relatively consist with those of the prior periods.
Rating Outlooks
Long-Term Foreign Currency IDR RWN Long-Term Local Currency IDR Negative RWN Rating Watch Negative.
Financial Data
Cablevision S.A. (USD Mil.) Revenue EBITDA Cash Flow from Operations Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) 3/31/12 12/31/11 (3 Months) (12 Months) 411 1,523 135 478 78 156 648 1.2 0.9 323 125 489 1.0 0.8
Note: Cablevision changed to IFRS in January 2012. Figures as of March 2012 are three-month figures. Ratios have been calculated by annualizing income statement and cash flow items.
Related Criteria
Corporate Rating (August 2012) Methodology Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers (August 2012) Rating Global Telecom Companies (September 2011)

Key Rating Drivers: Catalysts for a downgrade center on adverse regulatory or legal issues, including the final application of the Broadcasting law approved in October 2009 and several legal actions working their way through the judicial process, such as the ones that threaten to nullify Cablevisions merger with Multicanal S.A. Fitch will continue monitoring the evolution of these actions and judicial processes. A negative ruling could trigger a downgrade.
Analysts
Cecilia Minguillon +54 11 5235-8123 cecilia.minguillon@fitchratings.com Alberto Moreno +54 11 5235-8129 alberto.moreno@fitchratings.com
45
Corporates
Recovery Rating
The recovery ratings for Cablevisions capital market debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery, constrained by the soft cap of RR4 for bonds issued by Argentine corporates. Although EBITDA is vulnerable to the continued legal actions against Cablevision, it should be noted that the company has financial flexibility as interests, and minimum capital expenditures are marginal compared to its distressed cash flow generation, considering the negative impact of any of the existing legal actions. Fitch has applied a 5.0x distressed EBITDA multiple, which is below the multiple used in the industry.
Recovery Analysis Cablevision S.A.

(USD Mil.) Available to Creditors 60.8 2.9 152.2 215.9 Going Concern Enterprise Value March 31, 2012 annualized EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
538 35 350 5.0 1,749 61 80 141 1,749 175 1,574
156.0 76.0 5.7 761.0 998.7
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Value Recovered Recovery Rating Recovery Ratinga RR4
1,574 1,574 78 1,495
Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 0.0 Recovery (%) 0 0 Notching Rating
Unsecured Priority Senior Unsecured

a
Lien 648
Value Concession Recovered Recovery (%) Allocation (%) 648 100 100
Notching
Rating B
Cablevisions recovery rating is capped at RR4 due to concerns about the low probability of high recoveries for bondholders of corporates domiciled in Argentina. The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Source: Fitch Ratings.
46
Corporates
Organizational Structure Cablevision S.A.
(USD Mil.)
LTM March 31, 2012 Summary Statistics
EBITDA Cash and Marketable Securities Total Debt 538 156 648
Cablevision S.A.
IDR B/Rating Outlook Negative
Argentina
100%
Paraguay
Uruguay
70%
PEM S.A.
70%
Television Dirigida SAECA Cablevision Comunicaciones SAECA Consorcio Multipunto S.A. Teledeportes Paraguay S.A.
100%
Adesol S.A.
70%
CV Verasategui S.A.
100%
Cable Imagen SRL

100%
70%
Wolves Television S.A. Aire Vision Internacional S.A. Prima S.A.
100%
60%
100%
100%
Fintelco S.A.
Source: Fitch and Cablevision S.A.
47
Corporates
Debt and Covenant Synopsis Cablevision S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Sale of Assets Restriction Multicanal S.A.a N.A. Indenture as of July 19, 2006; Second Amendment on July 20, 2006; Third Amendment on Sept. 20, 2006; Fourth Amendment on Dec. 18, 2006; Fifth Amendment on March 30, 2007; Sixth Amendment on Dec. 21, 2007; Eighth Amendment on June 30, 2009. July 20, 2016 USD80.3 million Step-Up Sr. Unsecured Notes due 2016 (10-Year Notes)
N.A. N.A. Neither the issuer nor subsidiaries cannot sell assets that will result in a material adverse effect and if such sale is higher than USD10 million, unless an independent financial advisor has delivered a valuation to the board of directors and at a price consistent with such valuation. Neither the issuer nor subsidiaries are allowed to incur additional debt except permitted debt if total consolidated debt to annualized pro forma consolidated operating cash flow is lower or equal to 6.5x. Permitted debt includes debt used to refinance existing or permitted indebtedness if it is made pari passu or subordinated to the notes, subject to standard limitations. Debt can also be incurred if its related to performance bonds, obligations under the interest rate agreements and currency agreements and any other debt for USD25 million or less. Liens may not be incurred by issuer or any significant subsidiary, unless 1) such subsidiary simultaneously executes and delivers a supplemental indenture to the notes indenture providing for a guarantee by such subsidiary of payment of the notes and 2) such subsidiary waives and will not claim or take any right against the issuer or any other subsidiary as a result of any payment by such subsidiary under its subsidiary guarantee. No material provision noted.
Debt Restriction Additional Debt Restriction
Limitation on Secured Debt
Cross default when an uncured event of default occurs for debt of more than USD10 million. If any event of default occurs and is continuing the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Holders of the majority of the outstanding notes may rescind a declaration of acceleration within 30 days. Capital Expenditures N.A. Reserve Account N.A. Cash Sweep N.A. Transactions between issuer and shareholders, affiliates, or subsidiaries other than payments related with programming Transactions with Affiliates agreements for more than USD10 million shall require a fairness opinion. Restrictions on merger or consolidation of issuer and subsidiaries. Exceptions include 1) merger with a fully owned Limits on Consolidations or Mergers subsidiary which has positive net worth and the transaction does not imply any other delivery to shareholders other than ordinary shares representative of the transaction; 2) any surviving entity would assume all obligations of the issuer under the indenture; 3) immediately after giving effect to the emerge no event of default occurs. a Multicanal S.A. merged with Cablevisin S.A. back in 2006, and the merger was authorized in December 2007. Still, the merger needs to be registered by the Inspeccin General de Justicia. N.A. Not applicable. Source: Company and Fitch Ratings.
Restricted Payments Other Cross Default Acceleration
48
Corporates
Financial Summary Cablevision S.A.
(ARS 000, Fiscal Year Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Note: Numbers may not add due to rounding. Source: Cablevision S.A. and Fitch. 3 Months 3/31/12 586,323 32.7 7.0 8.8 3.8 7.0 1.2 2.3 1.6 1.5 1.2 0.9 10.8 0.1 8,153,193 683,261 354,641 2,486,894 2,841,535 2,841,535 0 2,841,535 3,827,582 6,669,117 2011 1,989,315 31.4 28.3 (7.1) 18.4 7.0 8.6 3.7 7.0 (0.4) 0.6 1.0 1.3 1.1 0.8 11.2 0.1 7,804,212 539,943 306,314 1,799,527 2,105,841 2,105,841 0 2,105,841 3,628,548 5,734,389 2010 1,777,571 36.4 31.2 11.3 21.7 11.0 11.7 6.3 11.0 2.5 3.9 1.8 1.2 1.1 0.9 7.5 0.1 6,462,002 395,309 128,892 1,898,200 2,027,092 2,027,092 0 2,027,092 3,314,107 5,341,199 1,515,179 38,529 1,553,708 0 (866,808) (134,031) 552,869 (17,498) 9,469 13,781 0 (311,014) 247,607 4,885,061 15.8 1,315,189 151,917 660,153 2009 1,469,412 34.8 32.0 17.1 18.6 7.1 6.8 3.6 7.1 2.3 2.6 2.3 1.3 1.4 1.3 9.4 0.1 5,697,998 143,788 196,174 1,852,661 2,048,835 2,048,835 0 2,048,835 2,770,863 4,819,698 1,326,859 (31,808) 1,295,051 0 (572,411) 0 722,640 (400) 18,499 (585,565) (74) (187,468) (32,368) 4,218,974 23.5 1,035,990 215,827 468,022 2008 1,157,905 33.9 26.2 6.5 9.3 5.0 4.6 2.2 5.0 0.9 1.2 1.3 2.0 2.2 2.0 10 0.1 5,525,921 185,434 278,399 2,275,885 2,554,284 2,554,284 0 2,554,284 2,253,883 4,808,167 1,009,335 (41,714) 967,621 0 (747,104) 0 220,517 (13,185) 7,142 (129,280) 0 (57,418) 27,776 3,417,476 30.8 809,196 251,661 200,691 2007 862,865 33.0 21.1 6.5 7.4 3.9 3.5 2.0 3.9 1.0 1.3 1.3 2.6 2.9 2.7 9.6 0.1 5,062,025 158,581 182,343 2,318,716 2,501,059 2,501,059 0 2,501,059 2,040,541 4,541,600 710,777 (29,001) 681,776 0 (511,040) 0 170,736 (15,540) 5,056 (198,906) 0 (19,681) (58,335) 2,612,972 90.4 555,321 246,113 143,997 2006 477,892 34.8 11.8 20.6 6.0 4.6 4.1 1.7 4.6 1.4 2.1 2.4 4.9 5.5 5.0 6.1 0.1 4,942,128 212,092 170,226 2,435,108 2,605,334 2,605,334 0 2,605,334 1,864,364 4,469,698 413,204 64,828 478,032 0 (196,001) 0 282,031 (231,266) 0 (163,598) 0 260 (112,573) 1,372,115 55.3 305,020 116,284 107,447
400,642 1,392,524 (59,135) (47,693) 341,507 1,344,831 0 0 (219,452) (1,390,608) 0 (404,434) 122,055 (450,211) (5,778) (43,623) 1,344 6,877 24,895 642,983 0 0 (1,665) (11,391) 140,851 144,635 1,792,323 419,656 66,817 218,133 6,336,886 29.7 1,377,183 230,780 639,907
49
Corporates
Financial Summary Cablevision S.A.
Period-End Exchange Rate Average Exchange Rate (USD 000, Fiscal Year Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Note: Numbers may not add due to rounding. Source: Cablevision S.A. and Fitch. 4.379 4.358 3 Months 3/31/12 134,527 32.7 7.0 8.8 3.8 7.0 1.2 2.3 1.6 1.5 1.2 0.9 10.8 0.1 1,862,055 156,046 80,994 567,966 648,960 648,960 0 648,960 874,157 1,523,116 91,924 (13,568) 78,356 0 (50,352) 0 28,005 (1,326) 308 5,712 0 (382) 32,317 411,234 96,287 15,331 50,049 4.305 4.160 2011 478,258 31.4 28.3 (7.1) 18.4 7.0 8.6 3.8 7.0 (0.4) 0.6 1.0 1.3 1.0 0.8 11.1 0.1 1,812,699 125,414 71,148 417,979 489,128 489,128 0 489,128 842,810 1,331,937 334,782 (11,466) 323,316 0 (334,321) (97,231) (108,237) (10,488) 1,653 154,582 0 (2,739) 34,772 1,523,473 22.0 331,093 55,483 153,842 3.979 3.913 2010 454,227 36.4 31.2 11.3 21.6 11.0 11.7 6.4 11.0 2.5 3.9 1.8 1.2 1.1 0.9 7.4 0.1 1,624,149 99,356 32,396 477,091 509,487 509,487 0 509,487 832,962 1,342,449 387,177 9,845 397,022 0 (221,497) (34,249) 141,276 (4,471) 2,420 3,521 0 (79,474) 63,272 1,248,291 10.3 336,073 38,820 168,690 3.799 3.728 2009 394,166 34.8 32.0 17.1 18.2 7.1 6.8 3.6 7.1 2.3 2.6 2.3 1.3 1.4 1.3 9.1 0.1 1,499,868 37,849 51,638 487,671 539,309 539,309 0 539,309 729,366 1,268,675 355,927 (8,532) 347,395 0 (153,548) 0 193,846 (107) 4,962 (157,076) (20) (50,288) (8,683) 1,131,729 4.7 277,902 57,895 125,546 3.454 3.163 2008 366,067 33.9 26.2 6.5 9.8 5.0 4.6 2.3 5.0 0.9 1.3 1.3 1.9 2.0 1.9 10.4 0.1 1,599,954 53,690 80,607 658,951 739,558 739,558 0 739,558 652,581 1,392,139 319,097 (13,188) 305,909 0 (236,194) 0 69,715 (4,168) 2,258 (40,871) 0 (18,152) 8,781 1,080,420 28.9 255,824 79,562 63,448 3.150 3.117 2007 276,870 33.0 21.1 6.5 7.4 3.9 3.5 2.0 3.9 1.0 1.3 1.3 2.6 2.9 2.7 9.6 0.1 1,606,992 50,343 57,887 736,100 793,987 793,987 0 793,987 647,791 1,441,778 228,069 (9,306) 218,763 0 (163,979) 0 54,785 (4,986) 1,622 (63,824) 0 (6,315) (18,718) 838,432 87.9 178,187 78,971 46,205 3.061 3.075 2006 155,437 34.8 11.8 20.6 5.9 4.6 4.1 1.7 4.6 1.4 2.1 2.4 4.9 5.5 5.0 6.1 0.1 1,614,547 69,288 55,611 795,527 851,138 851,138 0 851,138 609,070 1,460,208 134,397 21,086 155,483 0 (63,751) 0 91,732 (75,221) 0 (53,211) 0 85 (36,615) 446,289 47.6 99,210 37,822 34,948
50
Corporates
CAP Limited
Clarendon Alumina Production Limited
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B B/RR4 B
Key Rating Drivers

Government Support Vital: CAP Limiteds (CAP) ratings are linked to those of Jamaicas and reflect its 100% ownership by the government of Jamaica (GoJ), without support from which it could not continue operating. CAP is the holding company for the Jamaican governments 45% ownership in an unincorporated joint venture with a subsidiary of Alcoa Inc. (Alcoa) called Jamalco, which is a bauxite mining and alumina refining operation in Jamaica. This joint venture involves the proportionate sharing of production costs and the alumina output of the Clarendon Alumina Refinery (CAR). CARs current production rate is about 1.36 million tons per year. Grants Required to Fulfill Financial Obligations: CAP is obliged to fund its share of running and operating expenses at CAR, and it would be unable to meet these obligations without support from the GoJ. CAP received grants from the GoJ of USD17 million in fiscal 2011 and USD107.4 million in fiscal 2010. These grants ensure that CAP is able to meet its supply agreement obligations with customers. The long-term foreign currency IDR of Jamaica is rated B by Fitch Ratings with a Stable Outlook. CAPs Stable Outlook mirrors the sovereign rating outlook on Jamaica, to which its ratings are tied. Weak Stand-Alone Financial Profile: On a stand-alone basis, CAP has an extremely weak financial profile for its rating category. Total debt has increased to USD424 million in fiscal 2011 from USD373 million in fiscal 2010, while EBITDA has deteriorated further to negative USD39 million from negative USD14 million over the same period. The decline in EBITDA is primarily a result of the unfavorable long-term contract the company has with Glencore. Fiscal 2011 revenues of USD127 million were based on total alumina sales of 602,202 metric tons. This was flat to revenues of USD126 million in fiscal 2010. Unsecured Notes Guaranteed by Sovereign: CAPs USD200 million, 8.5% unsecured notes due November 2021 continue to be supported by an explicit unconditional and irrevocable guarantee by the GoJ for timely interest and principal on the notes. The GoJ guaranteed approximately 90% of CAPs USD424 million of total debt as of the fiscal year-end March 31, 2011. Cash at USD4.1 million is extremely low in relation to short-term debt of USD169 million.
Rating Outlooks
Financial Data
CAP Limited 3/31/11 Total Adjusted Capital (USD Mil.) Total Debt (USD Mil.) Operating Revenue (USD Mil.) Net Income (USD Mil.) FCF Margin (%) ROAE (%) Total Debt to EBITDA (x) 242 424 127 (73) (17) 50 (11.0) 3/31/10 264 373 126 44 37 (33) (25.8)

Ratings Tied to Sovereign: CAPs future rating actions are directly linked to Fitchs actions taken on Jamaica. If Fitch were to further downgrade the ratings on the sovereign due to concerns regarding macroeconomic pressures or upgrade the ratings due to liquidity improvement, then CAPs ratings would also mirror this action. This rating linkage will continue as long as the company remains 100% owned by the GoJ. The GoJ announced in 2009 that it is seeking to sell its 45% stake in Jamalco, and Fitch understands that this process is ongoing. Fitch notes that Alcoa has a right of first refusal on buying the shares. CAPs USD200 million 8.5% unsecured notes due 2021 are subject to a change-of-control clause, which creditors may choose to activate. Should any potential change of control result in effective acceleration of the obligation, Fitch will review for possible rating action.
51
Analysts
Jay Djemal +1 312 368-3134 jay.djemal@fitchratings.com Joe Bormann, CFA +1 312 368-3349 joe.bormann@fitchratings.com
Corporates
Liquidity and Debt Structure
Without the GoJs support, CAP has an extremely weak financial profile for its rating category, and its capital structure would not be sustainable on a stand-alone basis. Total debt increased to USD424 million in fiscal 2011 from USD373 million in fiscal 2010. CAP received USD124 million in total grants from the GoJ over the last two years, with USD17 million received in fiscal 2011 and USD107 million received in fiscal 2010. These grants ensured that CAP was able to perform to the level required to meet its supply agreement obligations with customers. Most of CAPs long-term debt is comprised of the USD200 million notes issued in November 2006. CAP, via its affiliate, Jamaica Bauxite Mining Limited (JBM), also has a USD33 million obligation (USD65 million original amount) to Glencore, CAPs main customer. The proceeds of this loan were used to fund CAPs share of an expansion project with Alcoa. As of March 31, 2011, approximately 90% of CAPs total debt of USD424 million was guaranteed by the GoJ.
Recent Financial Performance

As a result of unfavorable long-term contracts, CAP generated negative EBITDA of USD39 million during fiscal 2011 and has exhibited negative EBITDA since 2007. Fiscal 2011 revenues of USD127 million were based on total alumina sales of 602,202 metric tons with an average price per ton of USD209. This compares as a flat performance to fiscal 2010 revenues of USD126 million. CARs current production rate is about 1.36 million tons of alumina per year. The companys cash on balance sheet of USD4.1 million is insufficient to meet short-term debt requirements of USD169 million, indicating that ongoing government assistance will be required. CAPs 2011 capital expenditures were USD11 million, mostly used for Jamalcos mining infrastructure. FFO generated for fiscal 2011 was negative USD24 million. This compares with FFO of USD18 million in fiscal 2010. The negative performance is primarily due to the longterm inflexible supply contracts with CAPs main customer, Glencore, which have constrained CAPs ability to pass on higher caustic soda and fuel input costs. The long-term contracts with Glencore are a legacy of the AEL Secured Export Notes (10.48%) due in 2010, which were repaid early in February 2007 and were secured by future alumina receivables. The contract with Glencore expires in 2016.
Recovery Analysis
The USD200 million, 8.5% unsecured notes due 2021 have a recovery rating of RR4. CAPs unsecured notes are 100% guaranteed by the GoJ. Therefore, Fitch expects the notes will have the same recovery risk as the sovereign.
52
Corporates
Organizational Chart CAP Limited
Alcoa (United States) 60% Alumina Limited (Australia) 40% 100% 100% Government of Jamaica
Alcoa World Alumina and Alcoa Caribbean Alumina Holdings 100% Alcoa Minerals (Jamaica) 55% Jamalco/CAR Source: CAP.
CAP 45%
JBM and BATCO
53
Corporates
Debt and Covenant Synopsis Clarendon Alumina Production Limited (CAP)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Acquisitions/Divestitures Change of Control Provision Debt Restriction Limitation on Liens Clarendon Alumina Production Limited The Government of Jamaica Nov. 9, 2006 Nov. 16, 2021 Senior Unsecured Notes USD200 Million Occurs when CAPs interest in the Jamalco joint venture falls below 50% if at such time the amount of alumina production of the Jamalco joint venture that CAP is entitled to receive in a calendar year is less than 625,000 metric tons. CAP will not, and will not permit any subsidiary to, directly or indirectly, issue, assume, or guarantee to exist any lien of any nature whatsoever on any of its properties or assets without effectively providing that the notes are secured equally and ratably with the obligations so secured for so long as such obligations are so secured. Security interests may be permitted if they: (1) are existing or permitted under any existing facility; (2) secure the costs of the acquisition, construction, development, or expansion of any property or asset; (3) exist on any property or asset at the time of its acquisition or arising after such acquisition; (4) are granted by CAP to any person with whom CAP enters into a hedging arrangement; or (5) secure indebtedness not expressly permitted above, provided that the aggregate outstanding principal amount of such secured indebtedness does not exceed USD10 millon or its equivalent.
Source: CAP Ltd. offering memo and Fitch Ratings.
54
Corporates
Financial Summary Clarendon Alumina Production Limited (CAP)
(USD 000, Years Ended March 31, 2011) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 2011 (38,621) (38,621) (30.49) (30.49) 2.24 (16.97) 50.13 0.19 (1.32) (1.32) (0.19) (0.19) 0.19 0.04 0.06 (0.95) 78.21 (10.97) (10.86) (10.97) (10.86) 7.33 0.40 347,261 4,100 169,358 254,219 423,577 423,577 0 423,577 (181,998) 241,579 (23,791) 13,308 (10,483) 0 (11,009) 0 (21,492) 4 17,004 7,798 0 0 3,314 126,662 0.78 (61,629) 29,207 0 (72,953) 2010 (14,464) (14,464) (11.5) (11.5) 18.4 36.6 (33.3) 1.6 (0.5) (0.5) (0.1) (0.1) 1.6 0.6 0.6 14.6 7.7 (25.8) (25.7) (25.8) (25.7) 7.3 0.2 350,496 783 88,872 284,263 373,135 373,135 0 373,135 (109,045) 264,090 18,213 31,176 49,389 0 (3,388) 0 46,001 0 107,386 (117,319) 0 0 36,068 125,677 (4.6) (34,614) 30,444 0 43,577 2009 (15,560) (15,560) (11.8) (11.8) (10.6) (125.9) 54.2 (1.1) (0.5) (0.5) (0.1) (0.1) (1.1) (0.9) (0.9) (3.2) (14.1) (29.5) (29.5) (29.5) (29.5) 7.5 0.3 375,758 929 128,065 331,445 459,510 459,510 0 459,510 (152,622) 306,888 (61,965) (64,492) (126,457) 0 (39,446) 0 (165,903) 7 59,764 91,004 0 0 (15,128) 131,775 12.4 (35,479) 29,295 0 (65,063) 2008 (5,862) (5,862) (5.0) (5.0) 25.9 (54.5) 89.4 2.3 (0.2) (0.2) (0.1) (0.1) 2.3 (0.7) (0.4) 0.5 5.3 (55.7) (52.9) (55.7) (52.9) 8.6 0.1 362,452 16,057 30,441 295,838 326,279 326,279 0 326,279 (87,559) 238,720 35,454 27,311 62,765 0 (126,689) 0 (63,924) 19,145 691 13,372 0 0 (30,716) 117,221 (11.3) (23,558) 26,388 0 (49,898) 2007 (11,230) (11,230) (8.5) (8.5) 6.4 (40.3) 3,238.9 0.6 (0.4) (0.4) (0.1) (0.1) 0.6 (0.3) 0.3 0.2 17.0 (25.5) (21.3) (25.5) (21.3) 12.2 0.2 332,262 46,773 50,287 235,736 286,023 286,023 0 286,023 (24,038) 261,985 (10,617) 24,003 13,386 0 (66,604) 0 (53,218) 919 0 113,526 0 0 61,227 132,093 5.8 (21,461) 27,476 0 (45,280)
55
Corporates
Capex S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B B/RR4 B
Key Rating Drivers

Argentine and Regulatory Risks Are High: The B ratings of Capex S.A. are constrained by the B country ceiling of Argentina. The ratings are also restricted by the high regulatory risks associated with operating in the electricity sector in Argentina, which has resulted in electricity and gas prices that are below market levels. This has discouraged investments in both sectors. Capital investments for maintenance in the power generation industry depend on discretional approvals by the regulatory authority. Volatile Cash Flow and Currency Mismatch: Capexs cash flow generation is volatile, and power generation is subject to regulatory issues and weather conditions. The companys operating cash flow generation is concentrated in Argentina. Capex is also exposed to devaluation risk due to the currency mismatch between its peso-denominated cash flows and its U.S. dollar-denominated debt. Vertical Integration: Capex is an integrated thermoelectric generating company. Originally formed as an oil exploration and production company, Capex was transformed into an electric generation company due to its large discoveries of natural gas in 1991, coupled with the liberalization of Argentinas electricity sector. As of April 30, 2012, 65.1% of Capexs sales were derived from electric sales and 34.8% from oil and other liquids sales. In the last year, the gross energy generation was 3,270 GWh, a decline of 14.9% compared to the year before due to a one-time external event that affected the combined cycle generation for four months. Investments Key to High Degree of Vertical Integration: For the fiscal year ended April 30, 2012, Capex had CFFO of USD43 million and capital expenditures of USD45 million. The company has some flexibility to manage capital expenditures in the short term. In the long run, however, investments are vital to continue a high degree of vertical integration. Proven gas reserves cover approximately six to eight years of the electric plants needs. Operating Efficiencies: Capex has operating flexibility because it owns natural gas reserves. As a result, approximately 80% of gas needs at the electric plant are self-supplied. This gives the company an advantage over other players. Capexs generating units are efficient, and the proximity to its natural gas reserves in the Agua del Cajon field reduces the gas supply risk.
Rating Outlooks
Financial Data
Capex S.A. (USD Mil.) Revenue EBITDA Cash Flow from Operations (CFFO) Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) Total Debt/ CFFO (x) 4/30/12 176.2 32.4 43.1 4.9 237.7 7.3 7.2 3.2 4/30/11 177.2 46.4 46.7 45.3 230.8 5.0 4.0 3.0

Changes Affecting Capexs Financial Structure: The Stable Outlook reflects Fitchs expectation that Capex will manage its balance sheet to a targeted CFFO adjusted leverage ratio of around 3.0x. Under a conservative scenario, Fitch estimates the companys interest coverage to be above 2.5x. A significant increase in Capexs targeted leverage ratio would threaten credit quality and could result in a negative rating action. Sustained Decline in Gas Reserves: The ratings of Capex could be negatively affected by a sustained decline in gas reserves and production or failure to further develop new fields, which could threaten the integrated business model in the long term. Significant Changes in the Regulatory Framework: The ratings could be positively affected by a significant and sustained improvement in the regulatory environment. Conversely, a poor framework or a lower sovereign rating could result in a negative rating action.
56
Analysts
Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com Fernando Torres +54 11 5235-8124 fernando.torres@fitchratings.com
Corporates
Recovery Rating
The recovery ratings for Capexs capital market debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery in the event of a default. The ratings have been constrained by the soft cap of RR4 for bonds issued by corporates domiciled in Argentina. A liquidation analysis was not performed due to the low probability that the company would be liquidated, as a default would most likely occur to the imposition of exchange controls by the government, or an unfavorable tariff regime.
Recovery Analysis Capex S.A.

(USD Mil.) Going Concern Enterprise Value April 30, 2012 EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims 32.4 25 24.3 6.0 145.8 28.8 20.0 48.8 145.8 14.58 131.2 Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Recovery Rating Recovery Rating RR4a 131.2 131.2 6.6 124.7
Distribution of Value Secured Priority Senior Secured Lien 0 Value Recovered Value Recovered 131.2 Recovery (%) 0 Concession Allocation (%) 100 Notching Rating

a
Lien 237.7
Recovery (%) 55
Notching
Rating B
Capexs recovery rating is capped at the level of RR4 due to concerns about the low probability of high recoveries for bondholders of corporates domiciled in Argentina. The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. Source: Fitch Ratings.
57
Corporates
Organizational Structure Capex S.A.
Capex S.A. FYE April 2012 Summary Statistics

USD32.4 Million of EBITDA USD4.9 Million of Cash and Marketable Securities USD237.7 Million of Total Debt USD200 Million Senior Unsecured Notes Due 2018
95.00%
Hychico
84.87%
15.12% Source: Fitch and Capex S.A.
Buproneu
58
Corporates
Debt and Covenant Synopsis Capex S.A.
Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Capex S.A. N.A. Feb. 23, 2011 2018 Senior Unsecured Notes
N.A. N.A. Change of control clause at 101% of principal. The company will not and will not permit any restricted subsidiary to make any asset disposition unless: 1) the consideration received at the time of the sale is equal to the fair value of the shares or assets sold; 2) at least 75% of that consideration is received in the form of cash or equivalents, replacement assets or a combination of the above. The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness (including acquired indebtedness, with the exception of permitted) except that the company may incur indebtedness if, at the time of and immediately after giving pro forma effect to the incurrence and the application of the net proceeds therefrom, 1) no default or event of default shall have occurred and be continuing and 2) the consolidated interest coverage ratio would be no less than 2.5x and the consolidated indebtedness-to-consolidated EBITDA ratio would be no greater than 3.5x.
The company will not and will not permit any of its restricted subsidiaries to: 1) declare or pay any dividend other than: a) dividends
paid in capital stock, b) dividends paid to the company or restricted subsidiary; c) dividends, distributions or returns of capital made on a pro rata basis to the company and its restricted subsidiaries; 2) purchase, redeem, or otherwise acquire or retire for value any capital stock of the company held by persons other than the company or any of its restricted subsidiaries; 3) make any principal payment on, purchase, defease, redeem, prepay, decrease, or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment, or scheduled sinking fund payment, as the case may be, any subordinated debt (other than subordinated debt between the company and any restricted subsidiary); or 4) make any investments other than permitted investments. Other Limitation on Liens Transactions with Affiliates The company will not and will not permit any of the restricted subsidiaries to assume any lien (except for permitted ones) upon its property, unless at the same time the obligations under the notes are secured equally. The company will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions with, or for the benefit of, any of its affiliates, unless 1) the terms of such affiliate transaction are no less favorable than those that could reasonably be obtained in a comparable transaction at such time on an arms-length basis from a person that is not an affiliate of the company, 2) in compliance with applicable law, and 3) approved by the audit committee of the company. The company or its restricted subsidiaries will not enter into any sale and lease back transactions unless pursuant to the provisions of the covenant described under Limitation on Indebtedness. Not allowed unless: 1) the company is the surviving or continuing corporation; or 2) the person (if other than the company) formed by such consolidation is a corporation organized and validly existing under the laws of Argentina or any other qualified merger jurisdiction; and expressly assumes, by supplemental indenture (in form and substance satisfactory to the trustee), executed and delivered to the trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the notes and the performance and observance of the covenants of the notes and the indenture on the part of the company to be performed or observed.
Sales and Leaseback Transactions Mergers, Consolidations, Sales, Leases
N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
59
Corporates
Financial Summary Capex S.A.
Period-End Exchange Rate Average Exchange Rate (USD 000, Fiscal Years Ended April 30 ) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Source: Fitch and Capex S.A. 4.3786 4.2098 2012 32,403 18.4 23.6 (1.1) 6.1 2.6 1.1 0.6 2.6 0.5 0.6 1.0 3.2 7.3 7.2 12.3 0.1 361,599 4,930 25,125 212,572 237,696 237,696 0 237,696 66,904 304,601 46,022 (2,847) 43,175 0 (45,124) 0 (1,949) 0 (43,621) 7,058 0 (38,512) 176,190 (0.6) 9,432 28,872 4,756 4.0507 3.9559 2011 46,476 26.2 23.6 (0.1) (3.4) 2.6 1.6 0.9 2.6 0.6 1.5 1.0 3.0 5.0 4.0 13.8 0.1 371,372 45,354 20,432 210,398 230,830 230,830 0 230,830 89,675 320,505 47,984 (1,228) 46,756 0 (46,949) 0 (193) 87 (5,799) 27,993 0 22,088 177,241 39.5 10,141 29,557 (3,147) 3.8857 3.8759 2010 34,106 26.8 18.6 13.4 (9.6) 2.2 1.4 0.8 2.2 0.9 1.5 1.9 3.6 5.8 5.1 10.9 0.1 337,773 25,440 20,271 177,432 197,703 197,703 0 197,703 96,665 294,368 29,936 6,119 36,055 0 (19,063) 0 16,992 173 41,976 (53,017) 0 6,124 127,054 (30.0) (4,412) 24,837 (10,044) 3.7140 3.2594 2009 60,277 33.2 25.1 12.5 (16.2) 5.9 3.4 2.4 5.9 1.6 2.5 1.4 2.4 4.3 3.9 6.9 0.0 436,882 23,887 7,518 251,916 259,434 259,434 0 259,434 111,504 370,938 88,010 (9,721) 78,289 0 (55,256) (357) 22,676 163 (67,265) 3,899 0 (40,527) 181,534 (0.1) 6,879 17,969 (21,587) 3.1440 3.1440 2008 75,309 41.4 32.6 13.4 1.6 4.0 2.2 1.8 4.0 1.4 3.0 1.6 1.9 3.4 2.6 13.4 0.0 492,712 64,869 7,687 251,829 259,516 259,516 0 259,516 154,530 414,046 101,445 (38,236) 63,209 0 (40,696) 1,798 24,311 0 (18,964) 8,056 0 13,403 181,697 44.5 30,500 33,649 2,449 3.0895 3.0830 2007 46,934 37.3 21.3 30.6 0.9 4.8 2.7 1.4 4.8 1.7 3.3 2.5 2.9 5.2 4.1 14.5 0.1 451,648 53,408 15,085 228,446 243,531 243,531 0 243,531 154,675 398,206 67,173 (3,334) 63,839 0 (25,411) 0 38,427 82 2 (19,566) 20,546 39,491 125,711 8,555 17,630 663
60
Corporates
Financial Summary Capex S.A.
(ARS 000, Fiscal Years Ended April 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Source: Fitch and Capex S.A. 2012 136,410 18.4 23.6 (1.1) 6.1 2.6 1.1 0.6 2.6 0.5 0.6 1.0 3.3 7.6 7.5 7.6 7.5 12.3 0.1 1,583,298 21,587 110,011 930,766 1,040,777 1,040,777 0 1,040,777 292,947 1,333,724 193,742 (11,984) 181,758 0 (189,964) 0 (8,206) 0 (183,635) 29,714 0 (162,127) 741,726 5.8 39,705 121,544 20,020 2011 183,855 26.2 23.6 (0.1) (3.4) 2.6 1.6 0.9 2.6 0.6 1.5 1.0 3.0 5.1 4.1 5.1 4.1 13.7 0.1 1,504,315 183,714 82,762 852,258 935,020 935,020 0 935,020 363,247 1,298,267 189,819 (4,856) 184,963 0 (185,726) 0 (763) 345 (22,940) 110,737 0 87,379 701,147 42.4 40,115 116,925 (12,450) 2010 132,192 26.8 18.6 13.4 (9.9) 2.2 1.4 0.8 2.2 0.9 1.5 1.9 3.6 5.8 5.1 5.8 5.1 11.1 0.1 1,312,483 98,852 78,767 689,446 768,213 768,213 0 768,213 375,610 1,143,823 116,028 23,716 139,744 0 (73,886) 0 65,858 672 162,695 (205,490) 0 23,735 492,448 (16.8) (17,099) 96,265 (38,931) 2009 196,466 33.2 25.1 12.5 (15.6) 5.9 3.4 2.3 5.9 1.5 2.6 1.4 2.8 4.9 4.5 4.9 4.5 6.6 0.0 1,622,578 88,716 27,922 935,616 963,538 963,538 0 963,538 414,124 1,377,662 286,859 (31,686) 255,173 0 (180,100) (1,163) 73,910 531 (219,244) 12,709 0 (132,094) 591,692 3.6 22,423 58,567 (70,361) 2008 236,771 41.4 32.6 13.4 1.6 4.0 2.2 1.8 4.0 1.4 3.0 1.6 1.9 3.4 2.6 3.4 2.6 13.5 0.0 1,549,087 203,947 24,168 791,750 815,918 815,918 0 815,918 485,843 1,301,761 318,942 (120,213) 198,729 0 (127,948) 5,654 76,435 0 (59,622) 25,327 0 42,140 571,254 47.4 95,892 105,793 7,700 2007 144,696 37.3 21.3 30.6 0.9 4.8 2.7 1.4 4.8 1.7 3.3 2.5 2.9 5.2 4.1 5.2 4.1 14.4 0.1 1,395,366 165,003 46,604 705,783 752,387 752,387 0 752,387 477,867 1,230,254 207,093 (10,280) 196,813 0 (78,343) 0 118,470 254 6 (60,323) 63,344 121,751 387,567 26,376 54,352 2,045
61
Corporates
Ceagro Agricola Ltda.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Secured Local Currency Long-Term IDR National Long-Term Rating B B B B BBB
Key Rating Drivers

Established Business Position: Ceagro Agricola Ltda. (Ceagro) has established long-term relationships with grain producers, suppliers, and offtakers. The companys profile has benefited from an increase in its operating scale between 2010 and 2011, which has allowed it to purchase fertilizers at lower prices and increase the volume of barter originations. In 2012, for the third year in a row, the companys EBITDA margins are expected be strong, in the high single digits, and above the historical levels of between 3% and 5% (albeit lower than the 12% in 2010). High Commodity Risk and Small Size Limit Rating: Ceagros net leverage of 2.6x as of June 30, 2012 is well below that of most companies rated in the B rating category. This ratio partially reflects a favorable commodity environment during the past year that has led to strong demand and high prices for grain. The B ratings of Ceagro, despite leverage lower than most of its peers in the rating category, continue to reflect the high volatility of the agriculture industry. The companys small size compared to its large and established competitors also limits the rating. Working Capital Requirements Impediment to Growth: Trades originated through Caegros barter system grew to 46% of revenue during 2011 from 40% in 2010, as a result of fully deploying the proceeds from the notes issued in October 2010. The amount of spot trades the company was able to originate within the limits of its working capital was not sufficient to maintain the same growth pace. Unlike trades through the barter system, spot market trades require working capital for shorter periods of time and have lower profit margins. Asset Light Model: Net of short-term assets, Ceagro has a minimal amount of balance sheet assets. It depends on rentals for transportation and storage. While this has not been a problem in the past, the cost of renting equipment may rise in the future and compress operating margins. The companys debt has very little tangible support, which hurts recovery prospects. Fitch notes positively, however, that short-term assets are very liquid and of high quality.
Rating Outlooks
Foreign Currency Long-Term IDR Local Currency Long-Term IDR National Long-Term Rating Stable Stable Stable
Financial Data
Ceagro Agricola Ltda. (BRL Mil.) Revenue Operating EBITDAR Operating EBITDAR/ Revenues (%) Cash Flow from Operations Free Cash Flow FFO Interest Coverage (x) Total Debt Total Adjusted Debt/Operating EBITDAR (x) FFO Adjusted Leverage (x) LTM 6/30/12 12/31/11 1,050 99 9.3 1 (3) 5.5 295 3.0 1.6 969 94 10.0 (91) (101) 5.3 290 3.1 1.7

Key Rating Drivers: Deterioration in Ceagros liquidity, or an increase in the companys leverage range of 3.0x5.0x during the cycle could lead to a negative rating action. Leverage could increase either by weakening profitability, the launch of a large debt-financed investment program or sudden drop in trading volumes. Changes in its risk management, resulting in a higher exposure to commodity prices and exchange rate volatility, would also be viewed negatively. Conversely, a demonstrated ability to maintain margins in the 8%10% level and an increase in trading volumes without disproportionately increasing leverage could result in a positive rating action.
Analysts
Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com Gisele Paolino +55 21 4503-2624 gisele.paolino@fitchratings.com
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Recovery Worksheet
Ceagros recovery rating of RR4 indicates that the companys creditors would have average recovery prospects in the range of 31%50% of current principal and related interest in the event of default. This rating reflects a recovery rating cap for Brazil issuers of RR4, whereas Ceagros modified recovery analysis suggests a higher recovery level for the unsecured debt consistent with RR1. Fitch has performed a liquidation analysis in the event of bankruptcy. Considering the enterprise value is not appropriate, because Ceagro is a trading company. Its enterprise value can go down rapidly. Therefore, recovery analysis focuses on the liquidation value.
Recovery Analysis Ceagro Agricola Ltda.

(BRL Mil.) Going Concern Enterprise Value June 30, 2011 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Concession Payment Availability Table 352.9 35.3 317.6 Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Secured Priority Senior Secured Secured Lien 204.8 0.0 Value Recovered 204.8 Recovery (%) 100 0 Recovery Rating RR1 Notching +3 317.6 204.8 112.8 5.6 107.2 Rating BB 25 4.0 Liquidation Value Cash A/R Inventory Net PPE Total 48.0 339.5 94.4 42.2 524.1 Advance Rate 0 80 75 25 Available to Creditors 271.6 70.8 10.5 352.9
Lien 93.9
Value Recovered 93.9
Recovery (%) 100
Concession Allocation (%) 100
Recovery Rating RR1
Notching +3
Rating BB
The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Source: Fitch Ratings.
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Corporates
Organizational Structure Ceagro Agricola Ltda.
(BRL 000, As of June 30, 2012)
Antonio Carlos Gonalves Jr. 99.94% Christine Crothers Gonalves 0.06%
Ceagro Participaoes e Empreendimentos Ltda. 0.01% 0.01% 0.01% 99.99% Ceagro Agricola Ltda. Total Debt EBITDA Total Debt/EBITDA (x) Net Debt/EBITDA (x) 303,303 98,993 3.0 2.6 USD100 Mil. Senior Sec. Notes due 2016
99.99% Ceagro Armazns Gerais Ltda. No Debt
99.99% Ceagro Exportadora e Importadora Ltda. No Debt
Source: Fitch and Ceagro Agricola Ltda.
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Corporates
Debt and Covenant Synopsis Ceagro Argricola Ltda.
Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Limitation on Indebtedness Financial Covenant Ceagro Agrcola Ltda. Ceagro Participaes e Empreendimentos Ltda. Oct. 20, 2010 May 16, 2016 Senior Secured Notes USD100 Million The issuer will not, and will not permit any restricted subsidiary to, incur any indebtedness, provided, however, that the issuer or any restricted subsidiary may incur indebtedness if on the date of such incurrence and after giving effect thereto and the application of the proceeds there from, the issuers net debt-to-EBITDA ratio would not be greater than 3.25x. Neither the issuer nor the guarantor may incur indebtedness that is subordinate in right of payment to other indebtedness of the issuer or the guarantor unless such indebtedness is also subordinate in right of payment to the notes or the note guarantee on substantially identical terms, provided, however, that no indebtedness will be deemed to be subordinated in right of payment to any other indebtedness solely by virtue of being unsecured or by virtue of being secured on a senior or subordinated basis. The issuer will not, and will not permit any restricted subsidiary to, issue, assume, or guarantee any indebtedness secured by a lien upon any property or assets of the issuer or any restricted subsidiary without effectively providing that the notes together with, if the issuer so determines, any other indebtedness or obligations then existing or thereafter created or, in respect of liens on any property or assets of the issuer, the note guarantee, shall be secured equally and ratably with or prior to such indebtedness for so long as such indebtedness shall be so secured; provided, however, that any lien created for the benefit of the noteholders (and, if applicable, holders of such other indebtedness or obligations) pursuant to the foregoing shall provide by its terms that such lien will be automatically and unconditionally released and discharged upon release and discharge of the initial lien. Except as provided for under the indenture and the other collateral documents, the issuer shall not, and shall not permit any of its subsidiaries to, create or permit to exist any lien on the collateral. The issuer will not, and will not permit any restricted subsidiary to make any asset disposition unless: 1) the asset disposition is for fair market value; 2) at least 75% of the consideration consists of all or part of any of cash and temporary cash investments or additional assets; 3) within 365 days after the receipt of any net available cash from an asset disposition, the net available cash is used to permanently repay indebtedness, other than subordinated obligations, of the issuer or of any of its restricted subsidiaries; to acquire all or substantially all of the assets of a related business, or a majority of the voting stock of another person that thereupon becomes a restricted subsidiary engaged in a related business, or to make capital expenditures or otherwise acquire long-term assets that are to be used in a related business or to acquire additional assets for the issuer or its restricted subsidiaries. The issuer will not, and will not permit any restricted subsidiary to, enter into any sale or leaseback transaction. The issuer will not, and will not permit any restricted subsidiary to, enter into any transaction (or series of related transactions) with any affiliates, including any investment, either directly or indirectly, unless 1) such transaction or series of related transactions are on terms no less favorable to the issuer or such restricted subsidiary, as the case may be, than those that could have been obtained in a comparable arms-length transaction with an unrelated third party; and 2) the issuer delivers to the trustee with respect of any affiliate transaction or series of related affiliate transactions involving aggregate consideration in excess of USD2 million, an officers certificate stating that such affiliate transaction complies with this covenant and that such affiliate transaction has been approved by the management of the issuer; and with respect of any affiliate transaction or series of related affiliate transactions involving aggregate consideration in excess of USD10 million, an opinion as to the fairness to the issuer, or such restricted subsidiary of such affiliate transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized standing. The issuer will not, and will not permit any restricted subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any restricted subsidiary to pay dividends or make any other distributions on its capital stock to the issuer or any restricted subsidiary; pay any indebtedness owed to the issuer or any restricted subsidiary; make loans or advances to the issuer or any restricted subsidiary; or transfer any of its properties or assets to the issuer or any restricted subsidiary.
Limitation on Additional Debt
Limitation on Lien
Lien on the Collateral Asset Disposition Restriction
Sale and Lease-Back Transactions Restriction Transactions with Affiliates Restriction
Dividends Restriction
Source: Fitch and Ceagro Agricola Ltda.
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Financial Summary Ceagro Agricola Ltda.
(BRL 000, Years Ended as of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports and Fitch estimates. LTM 6/30/12 98,993 98,993 9.34 9.34 36.37 7.58 5.47 2.88 2.88 1.03 1.03 5.47 0.32 0.82 0.28 1.60 3.04 2.56 3.04 2.56 13.45 0.21 745,738 48,040 61,964 239,339 301,303 301,303 301,303 215,291 516,594 153,543 (152,233) 1,310 (4,744) (3,434) 234 30 (34,721) (37,891) 1,059,799 9.33 98,282 34,344 15,713 2011 93,794 93,794 9.68 9.68 34.89 (10.00) 17.78 5.32 2.94 2.94 0.99 0.99 5.32 (1.00) 0.11 (9.00) 1.71 3.10 2.25 3.10 2.25 12.49 0.22 499,960 79,769 62,640 227,808 290,448 290,448 290,448 197,094 487,542 138,157 (229,642) (91,485) (9,937) (101,422) 234 (20,900) (122,088) 969,080 18.07 93,277 31,957 32,183 2010 98,397 100,877 11.99 12.29 19.94 0.64 47.67 3.82 4.87 4.45 2.75 2.64 3.51 0.71 6.36 2.95 2.94 2.25 0.20 2.32 0.32 14.35 0.07 404,693 201,857 15,550 205,910 221,460 221,460 12,400 233,860 164,911 398,771 56,856 (48,868) 7,988 (2,704) 5,284 160,359 30,001 195,644 820,801 14.03 98,090 20,192 2,480 56,711 2009 33,757 35,932 4.69 4.99 8.67 (3.00) 36.15 4.22 13.85 7.79 1.71 1.64 2.7 (1.00) (1.00) (30.00) 5.68 1.78 1.59 1.97 1.80 5.34 0.29 138,635 6,213 17,339 42,607 59,946 59,946 10,875 70,821 72,999 143,820 7,857 (30,105) (22,248) (751) (22,999) (27) 26,142 3,116 719,820 8.83 33,668 2,437 2,175 22,349 2008 21,075 22,723 3.19 3.44 26.44 (1.00) 31.79 9.79 9.29 5.8 3.88 3.21 6.09 (1.00) (1.00) (7.00) 1.66 1.49 1.34 1.74 1.61 11.01 0.10 84,325 3,097 3,157 28,212 31,369 31,369 8,240 39,609 50,651 90,260 19,946 (27,997) (8,051) (1,096) (9,147) (14,511) 19,491 (4,167) 661,412 73.53 20,739 2,269 1,648
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Corporates
Celulosa Argentina S.A.
Ratings
Foreign Currency Long-Term IDR Local Currency Long-Term IDR B
Volatile Cash Flow Generation: Celulosa Argentina S.A.s (Celulosa) small size makes it more vulnerable to industry cycles due to lower economies of scale. Also, its operating results are exposed to high levels of volatility in international pulp prices. The company is also exposed to double-digit inflation in Argentina and other direct and indirect sovereign-related risks, including devaluation and refinancing risks. Business Model Vertically Integrated: Celulosa has pulp and paper mills in both Argentina and Uruguay, the latter through its subsidiary, Fanapel. Its operations are vertically integrated through distribution. The company purchases almost all of its fiber requirements from third parties. Dependent upon Import Restrictions: Celulosa is small in size compared to its peers in Chile and Brazil. This results in a cost structure that is above average within South America. The company benefits from import tariffs and other agreements, such as a bilateral trade agreement between the governments of Argentina and Brazil that limits Brazilian paper imports and reduces competition in the domestic market. Adequate Business Position: Celulosa is one of two market leaders in Argentina with a market share of 35% in the paper market. Celulosa has a diversified and stable customer base. Given its high cost structure, Celulosa has little flexibility to compete in the export market, which makes it highly dependent upon local demand. Aggressive Growth Strategy: Celulosa plans to increasingly integrate its operations into forestry and to develop new business lines. The acquisition of forestry assets has lead to demand from third parties for eucalyptus wood. As of today, 95% of the companys wood purchases are done on a spot basis, exposing the company to price and volume risks. Current market conditions prevent Celulosa from rolling out its growth strategy. Liquidity Is Tight: As of May 31, 2012, Celulosa had USD7 million of cash and marketable securities and USD71 million of short-term debt. Historically, the company has had a high concentration of its financial debt in the short term and has consistently been able to refinance these trade lines of credit.
Rating Outlooks
Financial Data
Celulosa Argentina S.A. (USD Mil.) Revenue EBITDA Cash Flow from Operations Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) CFFO/Net Debt (x) 5/31/12 389.6 62.3 19.5 7.0 156.6 2.5 2.4 0.1 5/31/11 365.6 65.8 22.6 7.0 156.4 2.4 2.3 0.2

Analysts
Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com Joe Bormann, CFA +1 312 368-3349 joe.bormann@fitchratings.com
Change in Financial Strategy: The Stable Outlook reflects Fitchs expectations that Celulosa will manage its balance sheet to a targeted debt-to-EBITDA ratio of about 3.0x for the fiscal year ended May 30, 2013. Under a conservative scenario, Fitch estimates the companys interest coverage to be around 3.0x. Any significant increase in Celulosas targeted leverage would threaten credit quality and could result in a negative rating action.
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Organizational Structure Celulosa Argentina S.A.
(USD Mil., As of May 31, 2012)
LTM May 2012 Summary Statistics EBITDA Cash and Marketable Securities Total Debt Total Debt/EBITDA (x) Net Debt/EBITDA (x) 62.3 7.0 156.6 2.5 2.4 Tapebicu, Cayman Ltd. (Cayman Islands) 100.00% Tapebicu, LLC. (Delawere)
Fanapel Investment Corp. (Bahamas) 15.00%
Tapebicu Investment Co, S.L. (Spain) Celulosa Argentina S.A. (Argentina Paper Division) 100 % Fideicomiso Forestal I 2.26% 97.95% 97.74% 66.42%
97.60% Fabrica Nacional de Papel S.A. (Uruguay)a 100.00% 50.00% Coverpel S.A.a Comital S.A.a 75.50% Casa Hutton S.A.b 62.50% Compania Papelera S.A.b 86.60% 97.74%
98.00% TC Rey S.A.c
Fideicomiso Tapebicua S.A.
Rudaco S.A.c Ivirareta S.A.c
2.05% 2.00%
Suministros Graficos Ltd. (Chile) b
aUruguay
paper division. bArgentine forestry division. cDistribution network. Source: Fitch and Celulosa Argenitna S.A.
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Financial Summary Celulosa Argentina S.A
(USD 000, As of May 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 2012 62,320 62,320 16.0 0.2 13.3 (0.1) 5.2 2.5 3.9 3.9 0.7 0.7 2.5 0.2 0.3 1.0 3.9 2.5 2.4 2.5 2.4 10.3 0.5 405,272 7,059 70,934 85,626 156,560 156,560 0 156,560 128,374 284,934 23,745 (4,234) 19,511 0 (19,731) (1,134) (221) 0 (190) 3,502 35 (1,358) 634 389,639 6.6 44,295 16,070 0 6,779 2011 65,887 65,887 18.0 18.0 15.6 1.8 13.8 3.3 4.7 4.7 0.7 0.7 3.3 0.2 0.3 1.4 3.4 2.4 2.3 2.4 2.3 8.6 0.5 394,201 7,048 76,818 79,637 156,455 156,455 0 156,455 129,927 286,382 31,730 (9,100) 22,630 0 (16,129) (128) 6,501 0 3,138 (7,026) 0 (771) 1,713 365,657 22.0 47,103 14,044 0 16,547 2010 52,058 52,058 17.4 17.4 18.5 12.2 7.1 3.7 3.7 3.7 0.6 0.6 3.7 0.6 0.7 5.9 3.2 3.3 3.2 3.3 3.2 7.5 0.4 370,684 5,595 67,578 102,043 169,621 169,621 0 169,621 110,645 280,266 38,561 5,583 44,144 0 (7,452) (415) 36,692 0 38 (36,636) 0 (18) (339) 299,841 5.4 34,768 14,237 0 7,556 2009 42,117 42,117 14.8 14.8 13.6 1.8 (34.3) 2.6 2.5 2.5 0.4 0.4 2.6 0.2 0.3 1.5 4.8 4.9 4.8 4.9 4.8 10.8 0.4 386,114 6,291 78,918 128,781 207,699 207,699 0 207,699 102,939 310,638 26,330 (11,577) 14,753 0 (9,600) (521) 5,152 0 (68,069) 62,597 0 (499) (1,339) 284,364 (7.1) 23,768 16,793 0 (41,034) 2008 48,596 48,596 15.9 15.9 14.4 (1.9) 6.8 3.4 4.4 4.4 0.7 0.7 3.4 0.1 0.2 0.7 2.7 2.1 1.9 2.1 1.9 10.8 0.5 394,818 8,065 56,204 46,427 102,631 102,631 0 102,631 136,348 238,979 26,639 (15,621) 11,018 0 (16,870) 0 (5,853) 0 3,592 10,538 0 (2,669) 5,608 306,005 32.1 23,246 10,954 0 9,291
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Corporates
Financial Summary Celulosa Argentina S.A.
Period-End Exchange Rate Average Exchange Rate (ARS 000, As of May 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 4.5238 4.3012 2012 268,050 268,050 16.0 0.2 13.3 (0.1) 5.2 2.5 3.9 3.9 0.7 0.7 2.5 0.2 0.3 1.0 4.1 2.6 2.5 2.6 2.5 10.3 0.5 1,833,368 31,935 320,890 387,357 708,247 708,247 0 708,247 580,737 1,288,984 102,132 (18,212) 83,920 0 (84,869) (4,878) (949) 0 (819) 15,063 150 (5,840) 2,727 1,675,915 15.0 190,522 69,122 0 29,156 4.0869 3.9860 2011 262,626 262,626 18.0 18.0 15.6 1.8 13.6 3.3 4.7 4.7 0.7 0.7 3.3 0.2 0.3 1.4 3.5 2.4 2.3 2.4 2.3 8.5 0.5 1,611,059 28,803 313,949 325,468 639,417 639,417 0 639,417 530,997 1,170,414 126,476 (36,272) 90,204 0 (64,291) (512) 25,913 0 12,510 (28,006) 0 (3,075) 6,830 1,457,510 24.2 187,754 55,980 0 65,955 3.9798 3.9134 2010 203,724 203,724 17.4 17.4 18.5 12.2 7.1 3.7 3.7 3.7 0.6 0.6 3.7 0.6 0.7 5.9 3.3 3.3 3.2 3.3 3.2 7.6 0.4 1,474,842 22,261 268,871 405,999 674,870 674,870 0 674,870 440,223 1,115,093 150,905 21,847 172,752 0 (29,162) (1,626) 143,590 0 149 (143,372) 0 (69) (1,328) 1,173,399 10.7 136,061 55,716 0 29,570 3.7990 3.7279 2009 157,009 157,009 14.8 14.8 13.6 1.8 (35.5) 2.6 2.5 2.5 0.4 0.4 2.6 0.2 0.3 1.5 4.9 5.0 4.9 5.0 4.9 10.9 0.4 1,466,847 23,901 299,809 489,238 789,047 789,047 0 789,047 391,067 1,180,114 98,154 (43,159) 54,995 0 (35,787) (1,942) 19,208 0 (253,753) 233,354 0 (1,859) (4,992) 1,060,082 9.5 88,604 62,604 0 (152,969) 3.4538 3.1631 2008 153,714 153,714 15.9 15.9 14.4 (1.9) 6.5 3.4 4.4 4.4 0.7 0.7 3.4 0.1 0.2 0.7 3.0 2.3 2.1 2.3 2.1 10.3 0.5 1,363,622 27,854 194,116 160,348 354,464 354,464 0 354,464 470,919 825,383 84,261 (49,412) 34,849 0 (53,362) 0 (18,513) 0 11,361 33,332 0 (8,441) 17,739 967,925 34.1 73,528 34,649 0 29,388
70
Corporates
CEMEX, S.A.B. de C.V.
CEMEX Espaa, Rinker Materials Corporation, C5, C8, C10, C10-EUR Captial (SPV) Limited, CEMEX Finance Europe B.V., and CEMEX Finance LLC
Full Rating Report
Ratings
CEMEX, S.A.B. de C.V. and Subsidiaries Foreign Currency Long-Term IDR Senior Secured Debt Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating Short-Term Rating Senior Unsecured Programa Dual Revolvente de Certificados Bursatiles IDR Issuer default rating. B B+/RR3 B+/RR3 B BB(mex) B(mex) BB(mex) BB(mex)
Key Rating Drivers

High Leverage: The B ratings of CEMEX S.A.B. de C.V. (CEMEX) and its subsidiaries reflect the companys high leverage. CEMEX had USD17.629 billion of total debt and USD625 million of cash and marketable securities as of June 30, 2012. During the LTM ended June 30, 2012, CEMEX generated USD2.418 billion of EBITDA. These figures result in a 7.3x total debt/EBITDA ratio and a 7.0x net debt/EBITDA ratio. Leverage to Remain High through Year-End 2014: Fitch expects CEMEXs leverage to remain high through the end of 2014. Fitch projects that CEMEX will generate about USD2.450 billion of EBITDA in 2012, USD2.550 billion in 2013, and USD2.900 billion in 2014. Fitch projects free cash flow after capex and the payment of coupons on the companys perpetual notes to be negative USD150 million in 2012, neutral in 2013, and positive USD500 million in 2014. At these levels, absent asset sales, CEMEXs leverage will continue to be elevated, and the company will need to focus on cost control and liability management. U.S. Market Remains Key to Recovery: CEMEX generated USD2.339 billion of EBITDA during 2011. Its main markets were Mexico (USD1.2 billion), Central and South America (USD513 million), the Mediterranean (USD439 million), and Northern Europe (USD416 million). Cemexs U.S. operations were very weak in 2011, generating a negative EBITDA of USD100 million. This compares with a pro forma estimated U.S. EBITDA of USD2.6 billion during 2006 as though Rinker were consolidated. The companys will not be able to lower leverage until the U.S. recovers and free cash flow exceeds USD1 billion annually. Manageable Debt Amortization Schedule Unless Spring Maturities Triggered: Cemex has a manageable debt amortization schedule due to the refinancing of its 2009 Financing Agreement during September 2012 and the successful issuance of a USD1.5 billion note due in 2022 during October. Following these events, the company has USD137 million of debt maturing in 2013, USD1.2 billion in 2014, and USD1.4 billion in 2015. The amortization schedule then escalates to USD3.1 billion in 2016, USD4.8 billion in 2017, and USD2.7 billion in 2018. Cemexs new agreement has springing maturities, which could lead to about USD7.4 billion falling due in 2014 if debt outside of the Facilities Agreement dated Sept. 17, 2012 (New Facilities Agreement) is not refinanced, extended, or purchased prior to its maturity date.
Rating Outlooks
Long-Term Foreign Currency IDR Stable Long-Term Local Currency IDR Stable National Long-Term Rating Stable
Financial Data
Cemex, S.A.B. de C.V. (USD Mil.) Revenue Total Adjusted Debt FFO EBITDA Cash and Marketable Securities FFO Adjusted Leverage (x) Adjusted Net Debt/EBITDA EBITDA/Debt Service Coverage (x) 6/30/12 15,125 19,541 251 2,418 625 10.8 7.0 1.4 2011 15,187 19,846 743 2,339 1,158 8.8 7.3 1.2

Positive Rating Actions: Positive drivers include the recovery of the anemic U.S. economy and improved demand for cement. A stabilization of risks related to the eurozone would also be positive in terms of improving the overall operating environment of Cemex in Europe and could contribute to a positive rating action in the future. Negative Rating Action: Negative drivers include include a downturn in the companys businesses in Mexico and Central/South America, which have been crucial to offset weakening of the companys Northern European division and Mediterranean divisions. Further weakening
Analysts
Joe Bormann, CFA +1 312 368-3349 joe.bormann@fitchratings.com Alberto Moreno +52 818 399-9100 alberto.moreno@fitchratings.com
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in Europe or the U.S. would also have a material impact upon cash flow and could lead to a ratings downgrade.
Recovery Rating
CEMEX and its subsidiaries have issued debt instruments from Mexico, the U.S., the British Virgin Islands, the Netherlands, and Spain. The guarantors of these instruments are also domiciled in various countries. As a result of the complexity of the companys capital structure and the various legal jurisdictions, we do not envision a bankruptcy scenario for CEMEX in the event of additional financial distress, as creditors would most likely not want to enter a process with such a high degree of uncertainty regarding the outcome. Fitchs opinion is that the most likely scenario under additional stress would be a negotiated restructuring of the debt. Consequently, a liquidation analysis was not performed. In deriving a distressed enterprise valuation to determine the recovery under this scenario, we discounted the companys LTM EBITDA to USD2.0 billion, which is a level that would just cover operating leases, interest expenses, and maintenance capital expenditures. A 20% decline in EBITDA to this level would most likely be driven by a more marked deterioration of the eurozone, which would send the U.S. into a double-dip recession, and have a negative impact upon Cemexs Mexican operations. Currently, the strong performance of CEMEXs Central America, South America, and Caribbean operations, and the gradual improvement of its U.S. operations, have been able to offset the negative cash flow trajectory of its Mediterranean operations, comprised mainly of Egypt and Spain, as well as its Northern European division. We applied a 6x distressed EBITDA multiple. This is a conservative multiple. CEMEX sold its business in Australia to Holcim during 2009 for a multiple of about 9x the estimated EBITDA during 2009 of USD200 million or 8x the estimated 2008 EBITDA of USD265 million. The low 6.0x multiple reflects the high leverage within the industry, which would hamper a competitive bidding process. It also reflects the fact that if Europe would deteriorate to the point that the U.S. entered a double-dip recession, the core operations of some potential bidders would also be hemorrhaging cash, limiting their ability to pursue the purchase of CEMEX or some of its larger assets. Regarding the specifics of the recovery analysis, the subordinated debt consists of the subordinated convertible instruments. The priority bank debt consists of the bank debt CEMEX has with Bancomex, which is secured by property, plant, and equipment. The Euro 2014 notes have been included in the debt categorized as senior secured despite not having the security package of the New Facilities Agreement. These notes were issued by Cemex Financed, Europe B.V. and only have Cemex Espana as a guarantor. The treatment of them in this manner reflects their relatively favorable position in the amortization schedule, which should give them a degree of negotiating power in the event of a restructuring.
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Recovery Analysis CEMEX, S.A.B. de C.V.
(USD Mil.) Going Concern Enterprise Value June 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Adminstrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Priority Bank Debt Senior Secured Lien 117 15,127 Recovery (%) 100 70 Concession Allocation Value (%) Recovered Recovery (%) 0 100 Value Recovered 117 10,627 Recovery Rating RR1 RR3 Recovery Rating RR6 Notching +3 +1 Rating BB B+ 2,487 20 1,990 6.0 11,938 1,500 250 300 1,950 11,938 1,194 10,744 Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims 10,744 10,744
Unsecured Priority Subordinated Source: Fitch Ratings.
Lien 2,007
Notching (2)
Rating CCC
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Organizational Structure CEMEX, S.A.B. de C.V.
(USD Mil., Unless Otherwise Stated)
CEMEX, S.A.B. de C.V. (Mexico)
$41 Sr. Secured Certificados Burstiles $800 Sr. Secured Floating Rate Notes Due 2015 $1,650 Sr. Secured Notes Due 2018 $715 Convertible Subordinated Notes Due 2015 $978 Convertible Subordinated Notes Due 2016 $690 Convertible Subordinated Notes Due 2018 $500 Proposed Sr Secured Exchange Notes due 2018 100%
2011 Summary Statistics

2,339 of EBITDA $1,196 Mexico ($100) United States $416 Northern Europe $513 Central and South America, Caribbean $439 Mediterranean $81 Asia ($206) Others
CEMEX Mexico, S.A. de C.V. (Mexico)

100%
100%
Empresas Tolteca de Mexico, S.A. de C.V. (Mexico)
Balance Sheet as of June 30, 2012

$625 Cash and Marketable Securities $17,629 of Total Debt $7,156 Subject to Financing Agreement $41 Certificados Bursatiles $9,501 International Fixed Income Debt $462 Perpetual Notes $469 Other Subsidiary Bank Debt
Centro Distribuidor de Cement, S.A. de C.V. (Mexico)

100%
New Sunward Holding B.V. (Netherlands)

100%
New Sunward Holding Financial Ventures B.V. (Netherlands)

100% 100% C-10, Perpetual, EUR730 Dual Currency Notes (EUR81 Outstanding) C-8, Perpetual, $750 Dual Currency Notes ($140 Outstanding) C-5, Perpetual, $350 Dual Currency Notes ($66 Outstanding) C-10, Perpetual, $900 Dual Currency Notes ($184 Outstanding)
CEMEX Espaa, S.A. (Spain) (issued through Luxembourg branch)

$1,068 Sr. Secured Notes Due 2020 EUR115 Sr. Secured Notes Due 2017 $704 and EUR179 Sr Secured Notes due 2019 100% 100% 100%
(British Virgin Islands)
100%
100%
CEMEX Finance LLC (USA)

$1,750 Sr. Secured Note Due 2016 EUR350 Sr. Secured Note Due 2017
CEMEX Corp (USA)
CEMEX Finance Europe B.V. (The Netherlands)

EUR900 Unsecured Notes Due 2014 (EUR 430 Outstanding)
Multiple International Subsidiaries
100%
CEMEX Inc. (USA)

100%
CEMEX Materials LLC (USA)

$150 Rinker Unsecured Notes Due 2025
Source: Fitch and CEMEX, S.A.B. de C.V. financial statements.
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Financial Summary CEMEX, S.A.B. de C.V.
Period-End Exchange Rate Average Exchange Rate (USD Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Total Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch Ratings. 12.8099 12.6676 LTM 3/31/12 2,418 2,661 16.0 17.6 6.5 2.2 (9.5) 1.2 1.5 1.5 1.4 1.4 1.1 1.1 1.5 2.1 10.8 7.3 7.0 7.3 7.1 8.7 38,356 625 111 17,518 17,629 17,251 11,462 31,002 251 390 641 (310) 331 120 20 (142) 1 (429) (100) 15,125 (0.9) 1,079 1,562 244 (1,296) 13.9298 12.4407 2011 2,339 2,596 15.4 17.1 6.7 1.8 (10.3) 1.5 1.5 1.5 1.2 1.2 1.4 0.9 1.5 1.6 8.8 7.8 7.3 7.6 7.2 8.4 39,362 1,158 383 17,858 18,241 18,241 13,973 33,820 743 1 744 (478) 267 99 258 458 1 (458) 625 15,187 7.6 963 1,522 257 (1,537) 12.3507 12.629 2010 2,321 2,521 16.4 17.9 8.7 7.3 (8.0) 2.0 1.6 1.6 1.2 1.2 1.9 1.3 1.7 2.9 6.9 7.7 7.4 7.7 7.4 7.6 41,706 676 466 17,438 17,903 17,903 15,982 35,315 1,386 196 1,582 (544) 1,037 93 304 (761) 0 (91) 582 14,115 (3.7) 859 1,419 200 (1,308) 13.0811 13.5002 2009 2,678 2,923 18.3 19.9 6.8 6.0 0.7 1.9 2.2 2.0 1.5 1.4 1.7 1.2 1.8 2.3 9.4 7.2 6.8 7.2 6.9 5.8 44,514 1,078 594 18,754 19,348 19,348 16,643 37,760 1,045 372 1,416 76 (615) 877 1,564 (526) (2,653) 1,774 (862) 175 14,652 (32.7) 1,173 1,201 245 104 13.6944 11.1635 2008 4,367 4,567 20.0 21.0 8.4 1.2 1.4 4.0 4.8 4.1 0.6 0.6 3.5 0.2 0.3 1.5 6.0 5.0 4.8 5.1 4.9 4.1 45,538 993 6,957 15,053 22,010 14,296 37,450 2,738 63 2,801 0 (1,903) (628) 270 971 (123) (494) 609 (792) 442 21,785 1 2,498 916 201 204
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Financial Summary CEMEX, S.A.B. de C.V.
(MXN Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Short-term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 3/31/12 31,719 34,914 16.0 17.6 6.5 2.2 (10.0) 1.2 1.5 1.5 1.4 1.4 1.1 1.1 1.5 2.1 9.7 7.4 7.2 7.5 7.2 0.1 0.0 512,904 8,351 1,486 234,254 235,740 25,560 261,300 153,267 414,567 3,289 5,121 8,410 (4,071) 4,339 1,574 263 (1,861) 11 (5,633) (1,307) 198,432 10.4 14,151 20,492 3,195 (17,006) 2011 29,102 32,297 15.4 17.1 6.7 1.8 (9.8) 1.5 1.5 1.5 1.2 1.2 1.4 0.9 1.6 1.6 8.8 8.7 8.2 8.6 8.1 0.1 0.0 548,299 16,128 5,333 248,754 254,087 22,365 276,452 194,648 471,100 9,241 18 9,259 (5,943) 3,316 1,232 3,213 5,702 11 (5,700) 7,774 188,938 6.0 11,983 18,937 3,195 (19,127) 2010 29,317 31,838 16.4 17.9 8.7 7.3 (8.0) 2.0 1.6 1.6 1.2 1.2 1.9 1.3 1.7 2.9 6.3 7.5 7.3 7.5 7.2 0.1 0.0 515,097 8,354 5,750 215,369 221,119 17,647 238,766 197,393 436,159 17,504 2,472 19,976 (6,875) 13,101 1,172 3,841 (9,615) 5 (1,148) 7,356 178,260 -9.9 10,843 17,926 2,521 (16,516) 2009 36,153 39,458 18.3 19.9 6.8 6.0 0.7 1.9 2.2 2.0 1.5 1.4 1.7 1.2 1.8 2.3 8.2 7.0 6.6 7.0 6.6 0.1 0.0 582,286 14,104 7,768 245,325 253,093 23,135 276,228 217,711 493,939 14,102 5,019 19,121 1,023 (8,303) 11,841 21,115 (7,097) (35,812) 23,953 (11,636) 2,364 197,801 -18.7 15,840 16,217 3,305 1,409 2008 48,748 50,987 20.0 21.0 8.4 3.3 1.2 4.0 4.8 4.1 0.5 0.5 3.5 0.2 0.3 1.3 7.4 6.2 5.9 6.2 6.0 0.0 0.3 623,622 13,604 95,270 206,142 301,412 15,673 317,085 195,772 512,857 30,564 708 31,272 (23,291) 7,981 10,845 672 (5,511) 6,794 (15,847) 4,934 243,201 2.8 27,884 10,223 2,239 2,278
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Cimento Tupi S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating B B/RR4 B BBB(bra)
Key Rating Drivers

Small Business Scale and Exposure to Sector Volatility: The B ratings of Cimento Tupi S.A. (Tupi) reflect the volatility of its cash flow generation due to the cyclicality of the cement industry. As a small producer of cement, Tupi lacks geographic diversification, which heightens its risk of a local market downturn. Tupis cost structure is higher than the largest integrated Brazilian cement producers. The strong credit profile of these large companies may allow them to pressure prices during a downturn in the industry in an attempt to sustain volumes, which would negatively affect Tupis ability to service its debt. Business Model Shift a Challenge: The ability of Tupi to complete its capex plan within the budget and on time (by first-quarter 2013) will be key to avoiding negative rating actions. Tupis strategy is to expand the unit at its Pedra do Sino plant, which will significantly reduce the companys reliance on slag and increase total overall production to 3.2 million tons of cement per year by 2014 from 2.4 million. The success of this expansion is crucial to the companys ongoing activities. Absent this expansion, Fitch Ratings estimates that the companys annual nominal capacity would be reduced to 1.6 million tons. Credit Ratio Deterioration Trend and Foreign Exchange Risks: Tupis credit metrics will be under pressure until 2013 due to the aforementioned USD150 million capital expenditure program. In May 2011, the company issued a USD100 million note. During 2012, they did an add-on issuance of USD50 million, which was key to supporting the capex program and diminishing refinancing risks. Fitch expects leverage to increase to around 4.5x in 2012 and return to below 4.0x during 2013 when the expansion project is completed. Around 65% of Tupis debt is denominated in U.S. dollars and 100% of its cash flow generation is in local currency, creating debt repayment risk in the event of a sharp fall in the value of the Brazilian real versus the U.S. dollar. Favorable Industry Outlook: The Positive Outlook for the cement sector in Brazil, reflecting the expansion of the real estate segment and infrastructure projects, should benefit Tupis operations, which are largely dependent upon favorable prices and high capacity utilization levels. Profitability margins should remain relatively flat, however, as a lot of new capacity is being added by the leading cement producers. Tupis end market, which is highly oriented toward the refurbishment and construction of homes, should not be materially affected by the high level of infrastructure projects in Brazil, as it is more linked with unemployment and income levels.
Rating Outlooks
Long-Term Foreign Currency IDR Stable Long-Term Local Currency IDR Stable National Long-Term Rating Stable IDR Issuer default rating.
Financial Data
Cimento Tupi S.A. (BRL Mil.) Net Revenue EBITDA CFFO Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) LTM 3/31/12 345.8 54.6 82.6 113.7 375.0 6.9 4.8 12/31/11 352.2 63.9 87.5 51.9 276.2 4.3 3.5
Related Research
Fitch Affirms Cimento Tupis Ratings (April 2012)

Analysts
Debora Jalles +55 21 4503-2629 debora.jalles@fitchratings.com Liliana Yabiku +55 11 4504-2208 liliana.yabiku@fitchratings.com
Capacity Expansion Delay: A rating downgrade or Negative Outlook could result from a delay in the expected timing of the expansion program. Economic Downturn in Brazil: Tupis operations are largely dependent upon favorable cement prices and high capacity utilization levels, which would be affected by a slowdown of the Brazilian economy. Upgrade Unlikely: Given current challenges related to a shift in its business model, an upgrade of Tupis ratings is unlikely in the short to medium term.
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Recovery Rating
Tupis recovery rating of RR4 indicates an anticipated recovery for creditors in the event of default in the range of 31%50% of current principal and related interest in the event of default. Fitch has performed a liquidation analysis in the event of a bankruptcy, although this scenario seems unlikely. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA by 50% and applied a 5.0x distressed EBITDA multiple.
Recovery Analysis Cimento Tupi S.A.

(USD Mil.) Available to Creditors 28,566 18,716 51,756 99,039 Going Concern Enterprise Value March 31, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
54,599 50 27,299 5.0 136,498 29,515 15,000 44,515 136,498 13,650 122,848
113,681 35,708 37,433 258,782 445,604
122,848 122,848 6,142 116,705
Distribution of Value Secured Priority Senior Secured Lien 0.0 Recovery (%) 0 Concession Allocation (%) 100 Notching Rating
Unsecured Priority Unsecured
Lien 374,979
Value Recovered 116,705
Recovery (%) 31
Notching
Rating B
a The recovery rating of Tupi was capped at RR4, which is consistent with an average recovery expectation. Fitch caps most of the recovery ratings in Brazil at RR4 to reflect concern about the ability of creditors to have strong recoveries in the event of default. Source: Fitch Ratings.
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Debt and Covenant Synopsis Cimento Tupi S.A.
(Foreign Currency Notes) Overview Issuer Document Date Maturity Date Description of Debt Amount Ranking Cimento Tupi S.A. May 6, 2011 May 11, 2017 Senior Unsecured Notes USD150 Million The notes will be the issuers senior unsecured obligations and will rank equally in right of payment with any future senior unsecured indebtedness of the issuer (except those obligations preferred by operation of law) and will be senior to any subordinated indebtedness of the issuer. The notes will effectively rank junior to all secured debt of the issuer to the extent of the value of the assets securing the debt, and will rank junior to all debt of the issuers subsidiaries. The issuer will not, and will not permit any restricted subsidiary to, incur any disqualified stock (other than disqualified stock of restricted subsidiaries held by the issuer or a restricted subsidiary, so long as it is so held), provided that the issuer or any of its restricted subsidiaries may incur debt and disqualified stock if, on the date of the incurrence, after giving pro forma effect to the incurrence and the receipt and the application of the proceeds therefrom, the net debt-to-EBITDA ratio shall not exceed 1) 4.25 to 1.0 if such incurrence occurs after the issue date and on or prior to Dec. 31, 2014 and 2) 3.75 to 1.0 if such incurrence occurs on or after Jan. 1, 2015. Notwithstanding the foregoing, the issuer and any restricted subsidiary may incur the following permitted debt: 1) debt of the issuer or a restricted subsidiary so long as such debt is owed to the issuer or a restricted subsidiary and which, if the obligor is the issuer, is subordinated in right of payment to the notes; 2) debt of the issuer or a restricted subsidiary constituting an extension or renewal of, replacement of, or substitution for, or issued in exchange for, or the net proceeds of which are used to repay, redeem, repurchase, refinance, or refund, including by way of defeasance (all of the above, for purposes of this clause, refinance) then outstanding debt in an amount not to exceed the principal amount of the debt so refinanced, plus premiums, fees, and expenses. Debt of the issuer or any restricted subsidiary incurred on or after the issue date not otherwise permitted in an aggregate principal amount not to exceed at any one time outstanding the greater of 1) USD15 million and 2) 10% of the issuers consolidated net tangible assets. Notwithstanding anything to the contrary in this covenant, the maximum amount of debt that the issuer and its restricted subsidiaries may incur pursuant to this covenant shall not be deemed to be exceeded, with respect to any outstanding debt, solely as a result of fluctuations in the exchange rate of currencies. The issuer will not, and will not permit any restricted subsidiary to, directly or indirectly: 1) declare or pay any dividend or make any distribution on its equity interests, including any payment made in connection with any merger or consolidation involving the issuer or any subsidiary of the issuer (other than) a) dividends or distributions paid in the issuers qualified equity interests and b) dividends or distributions by a restricted subsidiary payable, on a pro rata basis or on a basis more favorable to the issuer, to all holders of any class of capital stock of such restricted subsidiary a majority of which is held, directly or indirectly, by the issuer).
Financial Covenants Limitation on Debt and Disqualified Stock
Limitation on Restricted Payments
Acquisitions/Divestitures Repurchase upon Change of Control
If a change of control that results in a ratings decline occurs, each holder of the notes may require the issuer to repurchase all or a portion of such holders notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The issuer will not, and will not permit any restricted subsidiary to, make any asset sale unless the following conditions are met: 1) The asset sale is for fair market value; 2) at least 75% of the consideration consists of cash or cash equivalents received at closing. At any time prior to May 11, 2015, the issuer may on any one or more occasions redeem the notes, at its option, in whole, at a make-whole redemption price equal to 100% of the principal amount of such notes plus the greater of 1) 1% of the then outstanding principal amount of the notes and 2) the excess of a) the present value at such redemption date of i) the redemption price of the notes at May 11, 2015 plus ii) all required interest payments thereon through May 11, 2015 (excluding accrued but unpaid interest to the redemption date) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate plus 50 basis points, over b) the then outstanding principal amount of the notes; plus in each case any accrued and unpaid interest and additional amounts, if any, on such notes to, but excluding, the redemption date, as calculated by the independent investment banker.
Others Limitations on Sales of Assets Optional Redemption
Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Cimento Tupi S.A. offering memo and Fitch Ratings.
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Corporates
Financial Summary Cimento Tupi S.A.
(USD Mil.) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt-Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. 2008 49,765 49,765 15.39 15.39 24.61 8.19 25.41 0.74 0.74 0.39 0.84 3.28 1.23 1.87 1.26 1.87 1.26 0.72 377,486 30,440 67,613 25,653 93,266 93,266 93,266 214,210 307,476 75,658 (37,596) 38,062 (11,591) 26,471 16,376 (23,118) 19,729 323,356 13.62 41,225 48,287 2009 64,498 64,498 18.52 18.52 11.99 16.91 27.07 33.38 50.55 50.55 1.75 1.75 33.38 1.63 2.07 6.05 1.74 1.15 0.89 1.15 0.89 1.53 0.48 381,548 16,252 35,657 38,232 73,889 73,889 73,889 281,265 355,154 41,311 29,264 70,575 (11,661) 58,914 2,315 (75,417) (14,188) 348,342 7.73 57,125 1,276 67,055 2010 54,438 54,438 13.55 13.55 12.95 15.82 23.40 11.92 11.22 11.22 0.98 0.98 11.92 1.23 1.37 5.00 1.82 1.94 1.79 1.94 1.79 5.41 0.48 498,413 7,786 50,777 54,590 105,367 105,367 105,367 341,411 446,778 53,009 26,405 79,414 (15,871) 63,543 (15,875) (56,456) (8,788) 401,671 15.31 54,438 4,853 72,861 2011 63,916 63,916 18.15 18.15 14.52 3.91 20.98 5.35 3.93 3.93 0.98 0.98 5.35 0.46 1.26 1.28 3.31 4.50 3.69 4.50 3.69 8.27 0.17 637,388 51,985 48,931 238,915 287,846 287,846 287,846 311,790 599,636 70,790 16,770 87,560 (68,392) (5,402) 13,766 (461) (58,569) 115,462 (25,999) 44,199 352,158 (12) 63,916 16,255 68,532 LTM Ended 6/30/12 66,063 66,063 19.53 19.53 11.21 (23) 5.81 2.86 2.30 2.30 0.69 0.69 2.86 (1.00) 0.20 0.52 5.27 6.57 5.51 6.57 5.51 8.00 0.15 755,326 69,780 66,667 367,212 433,879 433,879 433,879 300,286 734,165 53,517 16,276 69,793 (135,080) (13,957) (79,244) 52,050 (60,855) 82,171 (5,750) (11,628) 338,239 65,807 28,750 17,562
81
Corporates
CLISA Compaa Latinoamericana de Infraestructura y Servicios S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Local Currency Long-Term IDR IDR Issuer default rating. B B
Key Rating Drivers

High Argentine Risk: The B ratings of Compaa Latinoamericana de Infraestructura y Servicios S.A. (CLISA) reflect its exposure to the cyclicality of the construction industry in Argentina and the level of public works expenditures. While infrastructure spending requirements in the country remain high, a deceleration in the level of public works or a slower pace of execution is expected due to limits on the governments available funding. CLISA is also exposed to the collection risk derived from having the government as its main counterparty. The ratings are further limited by the risks associated with generating its EBITDA in Argentina, which is also rated B. High Regulatory and Political Risks: CLISAs main activities depend on contractual agreements and government regulations at the national, provincial, and municipal levels. Exposure to regulatory risk derives from the delays in the renegotiations of public service contracts. In particular, CLISAs subsidiary, Metrovias (mass transportation), has heightened political risk following the national governments attempt to transfer the subway concession to the city of Buenos Aires. Most of Metrovias income was derived from national government subsidies. As of today, there is uncertainty surrounding the legal jurisdiction of the concession, and most of the legal conflicts surrounding this issue are still pending. Fitch Ratings does not expect cash support from CLISA to Metrovias to take place, but acknowledges that the legal issues are affecting the economics of the business with this risk incorporated in the current rating. Cash Flow Growth Driven by Infrastructure Demand: CLISA operates in four main businesses: construction and toll road concessions (through Benito Roggio e Hijos [BRH]), water treatment, waste management (CLIBA), and transportation. Over the last five years, CLISAs cash flow generation grew steadily, following positive trends for construction, primarily driven by public works expenditure. During fiscal year-end 2011, the group reported sales and EBITDA of USD1,061 million and USD145 million, respectively, an improvement from the USD737 million and USD111 million at fiscal year-end 2010. Construction represented around 50% of consolidated revenues, evidence of important growth in an election year. Strong Market Position Drives Large Backlog: The ratings positively reflect CLISAs strong market position as one of Argentinas largest privately owned industrial conglomerates. At the end of June 2012, BRHs construction backlog was USD918 million (ARS4,150 million), which should provide the company with an important source of cash generation for the next two years.
Rating Outlooks
Financial Data
CLISA (USD Mil.) Revenue EBITDA CFFO Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) CFFO/ Net Debt (x) 6/30/12 12/31/11 (6 Months) (12 Months) 544.0 1,061.4 83.7 145.1 (18.7) 55.3 61.0 345.7 2.1 1.7 (0.1) 94.3 311.5 2.1 1.5 0.3
Note: CLISA changed to IFRS in January 2012. Figures as of June 2012 are sixmonth figures. Ratios have been calculated by annualizing income statement and cash flow items.

Analysts
Downturn in Public Works and Deterioration in Collections: In Argentina, a worsening of the macroeconomic and political environment that could significantly threaten existing levels of infrastructure investments could result in a negative rating action. Other factors that could affect CLISAs credit profile are deterioration in collections from the government counterparties, the continued negative free cash flow, and an increase in the political risk associated with Metrovias.
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Corporates
Organizational Structure CLISA Compaa Latinoamericana de Infraestructura y Servicios
LTM June 30, 2012 Summary Statistics USD 83.7 Million of EBITDA (6 Months) USD 61.0 Million of Cash and Marketable Securities USD 345.7 Million of Total Debt
Roggio S.A. 97.5% CLISA S.A. 23.1% 46.2% Polledo S.A.I.C. y F. 31.8% Covimet S.A. 29.5% 18.7% Coviares S.A. 40.0% Others Taym 60.0% Others Others 97.2% Benito Roggio e Hijos S.A. 61.2% ACSA 48.2% 49.2% CLIBA 99.9% Benito Roggio Ambiental S.A. 97.1% Benito Roggio Transporte S.A. 99.9% Roggio Brasil Investimentos 2.4% Inversar S.A.
95.0% Tecsan
90.7% Metrovias 33.3% UGOFE
Source: Fitch and Compana Latinoamericana de Infraestructura y Servicios S.A.
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Corporates
Financial Summary Compaa Latinoamericana de Infraestructura y Servicios S.A. (CLISA)
Period-End Exchange Rate Average Exchange Rate 4.5238 4.4110 6 Months 6/30/12 83,772 15.4 2.5 2.9 0.8 2.5 (0.3) (0.0) (0.4) 2.5 2.1 1.7 17.1 0.5 1,048,329 61,038 159,500 186,230 345,730 0 345,730 128,621 474,351 41,974 (60,738) (18,764) 0 (43,601) 0 (62,365) 1,084 (7,607) 36,899 0 1,765 (30,223) 544,016 69,634 28,398 15,900 4.3053 4.1295 3.9787 3.9134 3.7990 3.7279 3.4538 3.1631 3.1500 3.1165 3.0905 3.0861
(USD 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Non-Recurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income
2011 145,092 13.7 0.3 (0.0) 0.0 2.8 3.0 0.7 2.8 0.2 0.6 0.9 2.3 2.1 1.5 16.7 0.5 901,292 94,379 158,349 153,162 311,511 0 311,511 85,008 396,519 88,410 (33,035) 55,375 0 (60,996) (3,382) (9,004) (767) (355) 50,459 0 (17,048) 23,286 1,061,392 44 116,664 48,204 2,613
2010 110,920 15.0 33.6 (3.6) 16.5 3.2 3.1 0.8 3.2 0.1 0.7 0.2 2.3 2.4 1.7 15.9 0.4 796,637 82,974 106,305 160,112 266,417 0 266,417 77,169 343,586 81,087 (75,845) 5,242 0 (31,570) 0 (26,328) (1,516) (6,638) 51,091 0 (8,872) 7,738 737,121 34 86,391 36,290 11,203
2009 86,008 15.6 41.7 6.2 16.7 3.1 2.5 0.9 3.1 0.7 1.7 2.1 1.8 2.2 1.1 17.8 0.3 603,306 92,449 57,845 132,802 190,647 0 190,647 58,430 249,077 71,442 (7,035) 64,407 0 (30,169) 0 34,238 895 (6,643) 2,028 75 (15,099) 15,492 550,192 (8) 66,209 34,340 9,423
2008 74,134 12.4 24.7 5.2 (37.1) 2.1 2.3 0.7 2.1 0.6 1.2 1.8 2.9 2.6 1.7 33.0 0.4 598,649 68,078 77,175 117,932 195,107 0 195,107 54,150 249,257 35,160 33,522 68,682 0 (37,881) 0 30,801 1,940 (512) 4,329 0 (7,269) 29,290 595,933 53,460 32,168 (10,058)
6 Months 12/31/07 6/30/07 65,649 11.8 24.2 (7.2) 1.6 2.4 2.4 0.7 2.4 (0.1) 0.3 (0.2) 3.1 3.0 2.3 15.8 0.4 546,937 39,843 71,040 122,853 193,893 0 193,893 64,444 258,337 36,387 (44,076) (7,689) 0 (32,142) 0 (39,831) (774) (2,914) 41,510 0 (3,678) (5,686) 554,594 41,556 26,804 1,022 54,060 12.0 14.4 (5.6) 2.6 1.9 2.6 0.6 1.9 (0.1) 0.8 (0.1) 5.3 3.8 2.3 16.1 0.3 547,226 80,294 70,598 133,406 204,004 0 204,004 65,647 269,651 18,177 (20,083) (1,906) 0 (23,323) 0 (25,229) (884) (1,277) 89,088 0 1,455 63,153 450,153 123.2 32,359 20,614 1,506
Note: Numbers may not add due to rounding. Source: Fitch Ratings and Compaa Latinoamericana de Infraestructura y Servicios S.A.
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Corporates
Financial Summary Compaa Latinoamericana de Infraestructura y Servicios S.A. (CLISA)
(ARS 000,Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income 6 Months 6/30/12 369,519 15.4 2.5 2.9 0.8 2.5 (0.3) (0.0) (0.4) 2.5 2.1 1.7 17.0 0.5 4,742,429 276,123 721,547 842,468 1,564,015 1,564,015 581,855 2,145,870 185,149 (267,916) (82,767) 0 (192,323) 0 (275,090) 4,783 (33,553) 162,761 7,784 (133,315) 2,399,654 307,156 125,263 70,133 2011 599,156 13.7 33.0 (0.8) 3.2 2.8 3.0 0.7 2.8 0.2 0.6 0.9 2.4 2.2 1.6 16.6 0.5 3,880,331 406,331 681,741 659,408 1,341,149 0 1,341,149 365,985 1,707,134 365,089 (136,419) 228,670 0 (251,884) (13,966) (37,180) (3,166) (1,468) 208,371 0 (70,398) 96,159 4,383,017 51.9 481,764 199,057 10,792 2010 434,073 15.0 33.6 (3.6) 16.6 3.2 3.1 0.8 3.2 0.1 0.7 0.2 2.3 2.4 1.7 15.9 0.4 3,169,578 330,130 422,957 637,037 1,059,994 0 1,059,994 307,033 1,367,027 317,324 (296,810) 20,514 0 (123,545) 0 (103,031) (5,933) (25,976) 199,941 0 (34,721) 30,280 2,884,649 40.6 338,084 142,018 43,843 2009 320,628 15.6 41.7 6.2 17.2 3.1 2.5 0.9 3.1 0.7 1.7 2.1 1.8 2.3 1.2 18.3 0.3 2,291,961 351,214 219,755 504,516 724,271 0 724,271 221,975 946,246 266,329 (26,226) 240,103 0 (112,468) 0 127,635 3,335 (24,766) 7,559 280 (56,289) 57,754 2,051,059 8.8 246,819 128,017 35,129 2008 234,492 12.4 24.7 5.2 (34.0) 2.1 2.3 0.6 2.1 0.5 1.2 1.8 3.2 2.9 1.9 30.2 0.4 2,067,613 235,128 266,548 407,313 673,861 0 673,861 187,022 860,883 111,214 106,035 217,249 0 (119,821) 0 97,428 6,137 (1,618) 13,694 0 (22,993) 92,648 1,884,995 9.06 169,099 101,750 (31,813) 6 Months Ended 12/31/07 6/30/07 204,594 11.8 24.2 (7.2) 1.6 2.4 2.4 0.7 2.4 (0.1) 0.3 (0.2) 3.1 3.0 2.4 15.9 0.4 1,722,852 125,506 223,777 386,988 610,765 0 610,765 202,998 813,763 113,399 (137,364) (23,965) 0 (100,169) 0 (124,134) (2,412) (9,080) 129,366 0 (11,461) (17,721) 1,728,393 129,508 83,535 3,185 166,835 12.0 14.4 (5.6) 2.6 1.9 2.6 0.6 1.9 (0.1) 0.8 (0.1) 5.3 3.8 2.3 16.1 0.3 1,691,202 248,148 218,184 412,291 630,475 0 630,475 202,883 833,358 56,096 (61,979) (5,883) 0 (71,976) 0 (77,859) (2,729) (3,942) 274,936 0 4,490 194,896 1,389,217 129.6 99,862 63,617 4,649
Note: Numbers may not add due to rounding Source: Fitch Ratings and Compaa Latinoamericana de Infraestructura y Servicios S.A.
85
Corporates
Compaa de Transporte de Energa Elctrica en Alta Tensin Transener S.A. (Transener)
Ratings
Foreign Currency Long-Term IDR Senior Notes due 2016 Senior Notes due 2021 Local Currency Long-Term IDR IDR Issuer default rating. CCC CCC/RR4 CCC/RR4 CCC
Weak Operating Profile: Compaa de Transporte de Energa Elctrica en Alta Tensin Transener S.A.s (Transener) low profitability and cash generation are the direct result of freeze-in tariff increases since 2002 within a context of double-digit inflation in Argentina. Fitch Ratings anticipates that EBITDA could be negative in 2012. FCF generation is also likely to remain negative. Low Financial Flexibility: The potential absence of payments agreed with the regulator over the next 12 to 18 months could put pressure on the companys ability to meet operating and capital expenditures during 2013. Fitch expects that the companys internally generated funds and liquidity position of ARS115 million as of March 30, 2012 will be sufficient to meet this years remaining debt interest servicing requirements and capital expenditures. Reliance on Funds from Government: Transener has partially relied on disbursements from the Wholesale Electric Market Administrator (CAMMESA) to face its operating needs and capital expenditures during 2010 and 2011. These disbursements were made under an agreement reached between the company, the Ente Nacional Regulador de la Electricidad (ENRE) and the Secretary of Energy in December 2010 on the amount of cost increases Transener had in the period from June 2005 to November 2010. Uncertainty in Disbursements Received: The timing of receiving disbursements is uncertain and subject to the discretion of the regulator and availability of funds at CAMMESA. Transener has received, as of March 2012, approximately 24% of the amount agreed, reflecting a high degree of uncertainty with respect to government funding. High Regulatory Risk: Transeners full-tariff review has been pending since 2002, highlighting its exposure to regulatory risk. This exposure is partially offset by the companys strong competitive position as the largest transmitter of high voltage electricity in Argentina, and its priority of payment from its offtaker, CAMMESA. Exposure to Convertibility and Exchange-Rate Risk: The majority of Transeners income is denominated in Argentine pesos, while its debt is denominated in U.S. dollars, exposing the company to transfer and convertibility risk.
Financial Data
Compaia de Transporte de Energia Electrica en Alta Tension Transener S.A. (USD Mil.) 3/31/12a Revenue 28 EBITDA (3) Cash Flow from Operations (10) Cash and Marketable Securities 26 Total Debt 153 Total Debt/EBITDA (x) (11.4) Net Debt/EBITDA (x) (9.5)
a b
12/31/11b 152 33 ,262 32 155 4.7 3.7
IFRS. Local GAAP. Note: Transener changed to IFRS in January 2012. Figures as of March 2012 are three-month figures. Ratios have been calculated by annualizing income statement and cash flow items.
Analysts
Ana Paula Ares +54 11 5235-8121 ana.ares@fitchratings.com Gabriela Curutchet +54 11 5235-8100 gabriela.curutchet@fitchratings.com
High Leverage: For the first three months of 2012, annualized total and net debt/EBITDA ratios were negative, indicating a worsening trend. Mitigating the companys high leverage, Transener has a favorable debt amortization schedule with no major maturities until 2021.

Deterioration of the Sovereigns Credit Quality: Deterioration of Argentinas credit quality could result in a negative rating action as CAMMESAs credit quality is closely linked to Argentinas. The electricity system relies on public subsidies to fulfill its obligations. Erosion of Liquidity: A significant deterioration in the companys liquidity could result in a Negative Outlook or rating action. Positive Tariff Review: A tariff increase could result in a Positive Outlook or rating action for the company.
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Corporates
Recovery Rating
The recovery ratings for Transeners capital markets debt instruments reflect Fitchs expectation that the companys creditors will have an average recovery constrained by the soft cap of RR4 for bonds issued by corporates domiciled in Argentina.
Recovery Analysis Compaa de Transporte de Energa Elctrica en Alta Tensin Transener S.A. (Transener)
(USD Mil.) IDR: CCC Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Available to Rate (%) Creditors 0 65 23.2 55 40 135.6 158.8 Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 0.0 Value Recovered Recovery (%) 0 0 Recovery Rating Notching Rating (13.4) 35 (8.7) 5.0 (43.6) 26.0 35.7 339.0 400.7
13.3 15.0 28.3
158.8 15.9 142.9
142.9 142.9 7.1 135.8 Value Recovered 142.9 Recovery (%) 93 Concession Allocation (%) 100 Recovery Rating RR4
Lien 153.6
Notching 0
Rating CCC
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Corporates
Organizational Structure Compaia de Transporte Elctrica en Alta Tensin S.A. (Transener) (As of LTM March 31, 2012)
Pampa Energa S.A. 50%
ENARSA 25%
Electroingeniera S.A. 25%
Public Float
Citelec S.A. 53%
47% Transener S.A.

EBITDA, March 2012 (3 Months, Annualized): USD(13.4) Million Consolidated Total Debt: USD153 Million Total Debt/EBITDA: (11.4x) Net Debt/EBITD: (9.5x)
90%
99% Transener Internacional S.A.
Transba S.A.
Source: Transener and subsidiaries financial statements, and Fitch.
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Corporates
Debt and Covenant Synopsis Compaa de Transporte de Energia Electrica en Alta Tension Transener S.A. (Transener)
Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Compaa de Transporte de Energia Electrica en Alta Tension Transener S.A. (Transener) N.A. Debt is Senior Unsecured Dec. 20, 2006 Dec. 15, 2016 Senior Unsecured Notes N.A. N.A. Change of control clause at 100% of principal. Change of control means that the Argentine government directly or indirectly owns over 50% of Transeners voting rights. The company and its affiliates might sell assets as long as 75% of the asset sale is paid in cash. The issuer is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. Transener can incur or maintain up to USD30 million of additional indebtedness if following such transaction interest coverage is above 2.0x and consolidated debt to EBITDA is below 3.75x. This figure is USD10 million for Transeners subsidiaries. Debt can also be incurred to finance trade receivables, in connection with hedging agreements, and in respect to certain intercompany loans under certain conditions. The issuer and its subsidiaries are allowed to incur in customary permitted liens related to the normal course of business. These include a maximum outstanding debt of USD10 million. The issuer is prohibited from making dividend payments and from making certain investments, including the acquisition of stocks. The issuer is allowed to make restricted payments for up to USD20 million as long as it is in full compliance with the terms and conditions of the notes. N.A. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. N.A. Intercompany loans are permitted and are not subordinated to the notes. The issuer may rescue the notes since Dec. 15, 2011 at par value plus 0.5 of annual interest rate in 2011, par value plus 0.25 of annual interest rate in 2012, at par value plus 0.125 of annual interest rate in 2013, and at par value in 2014 and on. Transactions between the issuer and affiliates for over USD5 million require approval from the board of directors and above USD20 million require a fairness opinion. Restrictions on merger of issuer and subsidiaries. Exceptions include that the surviving entity will be a corporation existing under the laws of Argentina or United States, no event of default occurs or is continuing, the companys pro forma debt levels allow it to incur additional indebtedness. Any surviving entity would assume all obligations of issuers under the indenture.
Other Cross Default Acceleration PIK Interest Rate Intercompany Loans Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
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Corporates
Debt and Covenant Synopsis Compaa de Transporte de Energia Electrica en Alta Tension S.A. (Transener)
Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Compaa de Transporte de Energia Electrica en Alta Tension Transener S.A. (Transener) N.A. Debt is Senior Unsecured Aug. 2, 2011 Aug. 15, 2021 Senior Unsecured Notes N.A. N.A. Change of control clause at 101% of principal. The company and its affiliates might sell assets as long as 75% of the asset sale is paid in cash. The issuer is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. Transener can incur or maintain up to USD30 million of additional indebtedness if following such transaction interest coverage is above 2.0x and consolidated debt to EBITDA is below 3.75x. This figure is USD10 million for Transeners subsidiaries. Debt can also be incurred to finance trade receivables in connection with hedging agreements, and in respect to certain intercompany loans under certain conditions. The issuer and its subsidiaries are allowed to incur in customary permitted liens related to the normal course of business. These include a maximum outstanding debt of USD10 million. The issuer is prohibited from making dividend payments and from making certain investments, including the acquisition of stocks. The issuer is allowed to make restricted payments for up to USD20 million as long as it is in full compliance with the terms and conditions of the notes. N.A. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. N.A. Intercompany loans are permitted and are not subordinated to the notes. The issuer may elect to redeem the notes at any time after the fifth anniversary of the date of issuance, inclusive, in its entirety, not partially, rescue at the following prices, expressed as percentages of nominal value: 2016 100% + 50% of coupon, 2017 100% + 25% of coupon, 2018 100% + 12,5% of coupon, 2019 and thereafter 100%. Transactions between the issuer and affiliates for over USD5 million require approval from the board of directors, and above USD20 million require a fairness opinion. Restrictions on merger of issuer and subsidiaries. Exceptions include that the surviving entity will be a corporation existing under the laws of Argentina or United States, no event of default occurs or is continuing, the companys pro forma debt levels allow it to incur additional indebtedness. Any surviving entity would assume all obligations of issuers under the indenture.
Other Cross Default Acceleration PIK Interest Rate Intercompany Loans Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
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Corporates
Financial Summary Compaa de Transporte de Energa Elctrica en Alta Tensin Transener S.A. (Transener)
(BRL Mil., As of Dec. 31) Period-End Exchange Rate Average Exchange Rate Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Inv. and Fin.) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 4.3786 4.3584 LTM 3/31/12 (3,355) (12.0) (0.4) (0.7) (0.1) (0.4) (1.3) (0.3) (4.1) (19.8) (11.4) (9.5) 13.0 0.0 367,830 26,233 7,311 146,047 153,358 0 153,358 0 153,358 137,426 290,784 (6,942) (4,006) (10,948) 0 (2,655) 0 (13,603) 0 0 3,671 0 0 (9,932) 28,060 0.0 (7,765) 5,003 0 (3,909) 4.3053 4.1295 2011 33,184 0.2 0.1 (0.1) (0.1) 1.7 1.7 1.4 1.7 0.3 1.6 0.0 4.7 4.7 3.7 4.7 3.7 0.1 0.0 455,161 32,046 4,305 150,251 154,556 0 154,556 0 154,556 244,979 399,535 13,919 (13,658) 262 0 (13,005) 0 (12,744) 0 (6,037) 3,681 0 22,279 7,179 152,139 2.0 3,492 19,230 0 (16,534) 4.3053 4.1295 2010 54,464 36.5 7.7 (1.7) 2.1 1.7 2.8 1.7 1.7 0.5 1.3 0.8 4.4 2.7 2.2 2.7 2.2 12.6 0.1 494,344 27,043 13,212 134,338 147,550 0 147,550 0 147,550 282,994 430,544 14,227 (4,710) 9,517 0 (11,977) (67) (2,527) 0 (1,525) (8,576) 0 24,054 11,425 149,169 (4.5) 23,279 19,265 0 5,930 3.9787 3.9134 2009 48,801 31.2 12.6 13.3 4.2 2.9 2.5 1.5 2.9 1.2 1.7 2.0 2.8 3.2 2.9 3.2 2.9 10.6 0.1 529,577 16,412 13,619 144,322 157,941 0 157,941 0 157,941 290,666 448,607 37,716 3,264 40,980 0 (20,267) 0 20,713 0 71 (20,565) 0 10,624 10,844 156,267 8.1 15,880 19,706 0 12,550 3.7990 3.7279 2008 47,209 32.7 10.3 (3.3) (6.3) 2.6 2.1 2.0 2.6 0.7 1.0 0.9 3.6 4.5 4.4 4.5 4.4 10.1 0.0 587,704 6,244 1,393 211,406 212,799 0 212,799 0 212,799 307,120 519,919 36,065 (6,740) 29,325 0 (34,031) (60) (4,766) 0 1,757 (12,000) 0 0 (15,009) 144,493 (10.8) 11,115 22,623 0 (20,829)
91
Corporates
Corporacion Electrica Nacional S.A.
(CORPOELEC)
Full Rating Report
Ratings
Foreign Currency Long-Term FC IDR Long-Term LC IDR Senior Unsecured B+ B+ B+/RR4
Key Rating Drivers

Ratings Linked to the Government: Corporacion Electrica Nacional S.A.s (CORPOELEC) ratings reflect its ownership by the Republic of Venezuela, to which its ratings are tied. The company is overseen by the Ministry of Popular Power for Electricity (MPPE), its sole shareholder. CORPOELEC has a public mandate to operate the nations electricity sector according to the planning directives of the MPPE and depends on public sector transfers for the sustainability of its operations. Monopolistic Position: CORPOELEC is a vertically integrated public utility responsible for the operation of the countrys electricity assets and the provision of electricity services in Venezuela. CORPOELEC was created in 2007 when the government nationalized the electricity sector. The entity absorbed all of the countrys generation assets along with its transmission, distribution, and electric power retail infrastructure during the period 2010 to 2011. This provided CORPOELEC with an installed capacity of 25,655 MW and a client base of 5.7 million users as of December 2011. Negative Operational Results Expected to Continue: The current tariff regime has been in place since 2002, and no tariff adjustments are expected in the near future. This situation will exacerbate CORPOELECs negative operational performance and will increase its dependence on public funding going forward. This status quo will continue to erode the entitys credit profile on a standalone basis. Sovereign Support Needed to Fund Capex: The company receives explicit support from both the central government through operational and capital expenditure allocations contained in the nations budget, and from PDVSA in the form of subsidized fuel costs. CORPOELEC received USD3.4 billion of government financing split across various agencies in 2011. For 2012, CORPOELECs capex will be financed with funds from the special indebtedness law, as contained in the national budget, for approximately USD2.2 billion in addition to financing from other government sources. These funds will be used to combine 4,329 MW of thermoelectric generation capacity and associated infrastructure in 2012. Liquidity Depends on Public Sectors Current Transfers: CORPOELEC received USD540 million in current transfers in order to cover operational costs during 2011. For 2012, the company has resources earmarked from the national budget totaling USD980 million to meet its day to day operations. Pro Forma Debt Structure: At Dec. 31, 2011, CORPOELECs pro forma financial long-term debt was USD6,688 million, of which USD663 million constituted the absorbed EDC bond issuance, rated B+/RR4 by Fitch. C.A. La Electricidad de Caracas (EDC) USD663 million senior unsecured bond issuance due 2014 and 2018 is now a direct obligation of CORPOELEC as the latter took control of EDC on Dec. 22, 2011. EDC ceased to exist in April 2012. CORPOELECs audited 2011 financial statements were not available at the time of publication.
FC Foreign currency. LC Local currency. IDR Issuer default rating.
Rating Outlooks
Long-Term LC and FC IDR Negative
Analysts

Key Rating Drivers: A downgrade of the sovereign or lack of sovereign support would lead to a downgrade of CORPOELECs ratings. An upgrade of the sovereign would be viewed positively and could lead to a positive rating action.
92
Corporates
Recovery Analysis
Fitchs Country-Specific Treatment of Recovery Ratings criteria published June 15, 2012 has been used to cap the rating at RR4. In this criteria report, Venezuela is categorized as a Group D jurisdiction, which has a soft cap for recovery ratings at RR4.
Organizational Structure CORPOELEC
Repblica Bolivariana de Venezuela
Ministerio del Poder Popular para la Energa Elctrica
Corporacion Electrica Nacional S.A. (CORPOELEC)
Administradora Serdeco C.A.
EDC Network Comunicaciones S.C.S.
Comunicaciones Moviles Conmovil
Proccedatos
Aracoy
Source: CORPOELEC.
93
Corporates
Debt and Covenant Synopsis CORPOELEC
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidation, Merger, Conveyance or Sale EDC Finance B.V. CORPOELEC April 10, 2008 April 10, 2018 Senior Unsecured Notes CORPOELEC will not, in one or a series of transactions, consolidate or amalgamate with or merge into any corporation or convey, lease or transfer substantially all of its properties, assets or revenues to any person or entity (other than a direct or indirect subsidiary of the issuer) or permit any person (other than a direct or indirect subsidiary of the issuer) to merge with or into it unless: Either the issuer is the continuing entity, or the person (the "successor company") formed by the consolidation or into which the issuer is merged or that acquired or leased the property or assets of the issuer will assume (jointly and severally with the issuer unless the issuer will have ceased to exist as a result of that merger, consolidation, or amalgamation), by a supplemental indenture (the form and substance of which will be previously approved by the Trustee), all of the issuers obligations under the indenture and the notes; 2) The successor company (jointly and severally with the issuer unless the issuer will have ceased to exist as part of the merger, consolidation or amalgamation) agrees to indemnify each holders of notes against any tax, assessment or governmental charge thereafter imposed on the holders of notes solely as a consequence of the consolidation, merger, conveyance, transfer or lease with respect to the payment of principal of, or interest, the notes; 3) Immediately after giving effect to the transaction, no default or event of default has occurred and is continuing; 4) The issuer has delivered to the trustee an Officers Certificate and an Opinion of Counsel, each stating that the transaction and the supplemental indenture, comply with the terms of the indenture and that all conditions precedent provided for in the Indenture and relating to the transaction have been complied with. CORPOELEC will not, and will not cause or permit any of its subsidiaries to, incur, permit or suffer to exist any liens (the "Initial Lien"), other than permitted liens, of any kind against or upon any property or assets of the issuer or any of its subsidiaries whether owned on the issue date or acquired after the issue date, to secure any indebtedness, unless it has made or will make effective provision whereby 1) the notes will be secured by such lien equally and ratably with (or prior to, in the event such indebtedness is subordinated in right of payment to the notes) all other indebtedness of the issuer or any of its subsidiaries secured by such lien and 2) if such lien secures obligations subordinated to the notes in right of payment, such lien shall be subordinated to a lien securing the notes in the same property as that securing such lien to the same extent as such subordinated obligations are subordinated to the notes. 1)
Limitation on Liens
Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
94
Corporates
Corporacion Pesquera Inca SAC
(Copeinca)
Full Rating Report
Ratings
Copeinca Foreign Currency Foreign Currency Long-Term IDR Senior Unsecured Copeinca ASA Foreign Currency Foreign Currency Long-Term IDR IDR Issuer default rating. B+ B+
Key Rating Drivers

Solid Market Position: Corporacion Pesquera Inca SACs (Copeinca) ratings reflect the companys solid market position as the second-largest producer in the Peruvian fishmeal industry (granted a fishing quota of 10.7% in Perus north zone). The company benefits from the stable business and regulatory environment in Peru due to the implementation of the Individual Transferable Quota (ITQ) System. Limited Diversification: Copeinca has limited product, customer, and production diversification. Fishmeal and fish oil represents 100% of the companys sales. China is the companys main market, representing approximately 40%50% of its total sales. Volatile Earnings and FCF: Inherent exposure to climatic events such as El Nio or La Nia result in significant volatility in operating performance and FCF generation from year to year and can negatively affect the companys credit profile. Shareholder Focus: Fitch believes that Copeincas financial strategy will continue to result in high dividend payments relative to its EBITDA and CFFO. This will limit FCF generation and will prevent a strengthening of Copeincas balance sheet. Expected Strong Performance and Stable Leverage: Following the recovery in the sector volumes during 2011, Copeincas revenue is expected to increase by about 10% to USD280 million. The companys FCF is expected to be relatively unchanged in 2012, and the company should continue to maintain a total debt/EBITDA ratio in the 2.5x3.0x range during 2012. Leverage stood at 2.6x on June 30, 2012.
B+
Rating Outlook
Foreign Currency Long-Term Rating Stable
Financial Data
Copeinca (USD 000) Revenue Operating EBITDAR Operating EBITDAR/ Revenues (%) Operating EBITDAR/Fixed Charges (x) Cash Flow from Operations Free Cash Flow Total Debt Total Adjusted Debt/Operating EBITDAR (x) Total Adjusted Net Debt/Operating EBITDAR (x) 12/31/11 254.5 100.0 39.3 4.8 10.2 (23.80) 266.3 2.7 2.1 6/30/12 315.0 111.6 35.4 5.2 61.4 37.2 292.6 2.6 2.2

Key Rating Drivers: Factors that could result in a negative rating action include deterioration in the companys credit metrics, resulting from some combination of the following elements: adverse climatic conditions and/or declining fishmeal and fish oil prices resulting in increased financial leverage and a weak cash position. Factors that could trigger a positive rating action include significant reduction in leverage levels on a sustained basis, consistent positive free cash flow generation, and product diversification.
Analysts
Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com Francisco Mercadal +5 62 499-3340 francisco.mercadal@fitchratings.com
95
Corporates
Recovery Worksheet
The B+/RR4 rating of the companys unsecured public debt reflects average recovery prospects in the range of 31%50% of current principal and related interest in the event of default. Fitch uses soft caps on its recoveries in certain markets to reflect concern about creditor rights or weak enforcement of existing laws. This resulted in a cap of Copeincas debt at the level of RR4, which is consistent with anticipated recoveries in the range of 30% to 50%.
Recovery Analysis COPEINCA S.A.

(USD Mil.) Going Concern Enterprise Value June 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims 112 70 33.5 5 167 Liquidation Value Cash A/R Licenses Net PPE Total 225 264 489 Advance Rate (%) 0 80 80 Available to Creditors 180 211.2 391.2
21.6 15 36.6
352.1 117.4 234.7 11.7 222.9
391 39.1 352
Secured Priority Secured
Lien 117
Recovery (%) 100
Recovery Rating RR1
Notching 3
Rating BB+
Unsecured Priority Senior Unsecured Unsecured
Lien 175 0.2
Value Recovered 175.0 0.2
Recovery (%) 100 100
Concession Allocation (%) 100 100
Recovery Rating RR1 RR1
Notching 3 3
Rating BB+ BB+
Notes: 1) The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. 2) Numbers may not add due to rounding. Source: Fitch Ratings.
96
Corporates
Organizational Structure Corporacion Pesquera Inca SAC
(USD Mil.)
Copeinca ASA (Norway)
100%
Copeinca International SLU (Spain) 52.26% 43.38% Corporacion Pesquera Inca SAC USD175 Mil. Senior Unsecured Notes Due 2017 Total Debt EBITDA TD/EBITDA (x) 292.6 111.6 2.2 1.46%
4.36%
100%
PFB Fisheries (Netherlands)
Note: Corporacion Pesquera Inca SAC is the only operational company. All debt resides in it. Source: Copeinca.
97
Corporates
Debt and Covenant Synopsis COPEINCA
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Financial Covenants Consolidated Net Debt/EBITDA (Maximum) Acquisitions/Divestitures Change of Control Provision Not later than 30 days following a Change of Control Triggering Event, COPEINCA or Copeinca ASA will make an Offer to Purchase all outstanding Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the Offer to Purchase Payment Date. COPEINCA or Copeinca ASA will not sell, convey, transfer, lease or otherwise dispose of all or substantially all of its and its Restricted Subsidiaries' properties and assets (computed on a consolidated basis) (as an entirety or substantially an entirety in one transaction or a series of related transactions), unless: (1) the buyer is a corporation in Peru, Norway, USA or EU and expressly assumes all obligations of Issuer under the Indenture; (2) immediately after the transaction no Event of Default will have accrued; (3) the buyer has a consolidated net worth equal or greater of the net worth of the issuer immediately prior to the transaction. Corporacin Pesquera Inca S.A.C. (COPEINCA) Copeinca ASA Jan. 29, 2010 Feb. 1, 2017 Unsecured and Unsubordinated Debt USD175 Million
Less than 3.75x.
Sale of Assets Restriction
Debt Restriction Additional Debt Restriction COPEINCA, Copeinca ASA, any Subsidiary Guarantor may Incur each and all of the following: (1) new indebtedness if it is expressly subordinated in right of payment to the Notes and Note Guarantees; (2) ranks at least parri pasu or below the Notes in case it is used to partially re-finance the Notes; (3) arises from hedging transactions; worker compensation claims, letters of credit or completion or performance guarantees and other financing of payables or receivables, or similar obligations in the ordinary course of business (4) is arising under agreements providing for indemnification, adjustment of purchase price or similar obligations; (5) is Permitted Subsidiary Indebtedness; (6) Guarantees of permitted indebtedness; (7) Indebtedness Incurred for inventory or receivables financing with Maturity not exceeding one year from the date of the sale of the Parent Guarantor and its Restricted Subsidiaries; and (8) Other Indebtedness in an aggregate principal amount not to exceed the greater of (a) US$50 million and (b) 7.5% of the total assets of the Parent Guarantor and its Restricted Subsidiaries. Copeinca ASA will not, and will not permit any of its Restricted Subsidiaries to directly or indirectly incur, assume or permit to exist any Lien of any nature whatsoever on any of its assets or properties of any kind, except Permitted Liens, unless the Notes or Parent Guarantee are equally and ratably secured by (or, if the obligation so secured is subordinated in right of payment to the Notes or the Note Guarantees, prior to) such Lien for so long as such Indebtedness is so secured. COPEINCA or Copeinca ASA will not, and will not permit any subsidiary to, enter into any sale and leaseback transaction with respect to any property unless COPEINCA or such Subsidiary would be entitled to: (i) incur debt in an amount equal to the attributable debt with respect to such sale and leaseback transaction; and (ii) create a lien on such property or asset securing such attributable debt without equally and ratably securing the notes.
Limitation on Liens
Limitation on Sale and Leaseback Transactions
Other Limitation on Restricted Payments Copeinca ASA will not, and will not permit any Restricted Subsidiary to, directly or indirectly: (1) declare or pay any dividend or make any distribution on or with respect to the Copeinca ASA's or any of its Restricted Subsidiaries' Capital Stock other than dividends or distributions payable in shares of Copeinca ASA's or any of its Restricted Subsidiaries' Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to acquire shares of such Capital Stock); (2) purchase, redeem, retire or otherwise acquire for value any shares of Capital Stock of Copeinca ASA or any Restricted Subsidiary (including options, warrants or other rights to acquire such shares of Capital Stock) held by any Persons other than Copeinca ASA, COPEINCA or any of its Restricted Subsidiaries; (3) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement for value, of Indebtedness that is expressly subordinated in right of payment to the Notes or any Note Guarantees (excluding any intercompany Indebtedness between or among the Copeinca ASA, COPEINCA and any of its Restricted Subsidiaries); or (4) make any Investment, other than a Permitted Investment.
Dividends Restriction Limitation on Dividend The payment of annual dividends is permitted by Copeinca ASA, in an aggregate amount for any fiscal year equal to (1) 100% of Consolidated Net Income for such fiscal year if the Consolidated Leverage Ratio would be lower than 1.50 to 1.00, (2) 85% of Consolidated Net Income for such fiscal year if the Consolidated Leverage Ratio would be equal to or greater than 1.50 to 1.00, but lower than 2.00 to 1.00, (3) 75% of Consolidated Net Income for such fiscal year if the Consolidated Leverage Ratio would be equal to or greater than 2.00 to 1.00, but lower than 2.50 to 1.00, (4) 50% of Consolidated Net Income for such fiscal year if the Consolidated Leverage Ratio would be equal to or greater than 2.50 to 1.00, but lower than 3.75 to 1.00; in each case the Consolidated Leverage Ratio shall be calculated immediately prior to the payment of such dividend on a pro forma basis after giving effect to the payment of such dividend.
N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
98
Corporates
Financial Summary Corporacion Pesquera Inca SAC (COPEINCA)
(USD 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. 2008 75,671 75,671 30.34 30.34 14.65 31.85 (1.00) 3.55 3.36 3.36 0.89 0.89 3.55 1.20 1.47 8.24 2.57 2.72 2.41 2.72 2.41 9.13 0.30 706,910 22,949 62,410 143,141 205,551 205,551 205,551 339,996 545,547 57,413 33,007 90,420 (10,979) 79,441 3,930 4,820 (82,509) 5,682 249,425 93.25 49,336 22,522 (3,450) 2009 59,540 59,540 28.25 28.25 5.58 9.36 (1.00) 1.95 4.08 4.08 1.13 1.13 1.95 0.65 0.89 3.83 5.04 2.42 2.21 2.42 2.21 8.36 0.27 689,753 12,478 38,239 105,580 143,819 143,819 143,819 367,057 510,876 13,910 12,812 26,722 (6,986) 19,736 6,736 24,790 (61,733) (10,471) 210,765 (16) 41,281 14,601 (2,508) 2010 75,704 75,704 32.49 32.49 12.93 (24) (2.00) 3.03 3.23 3.23 1.92 1.92 3.03 (1.00) 0.05 0.91 3.06 2.87 2.42 2.87 2.42 12.98 0.07 669,519 34,201 16,042 201,500 217,542 217,542 217,542 331,737 549,279 47,576 9,804 57,380 (63,027) (50,000) (55,647) 4,991 (91) 73,723 (1,523) 21,453 233,042 10.57 59,723 23,457 (6,493) 2011 100,014 100,014 39.30 39.30 10.27 (10.00) 13.26 3.20 4.76 4.76 1.45 1.45 3.20 0.80 0.28 3.96 2.66 2.06 2.66 2.06 8.68 0.18 793,514 60,490 47,788 218,488 266,276 266,276 266,276 388,643 654,919 46,267 (36,067) 10,200 (36,700) (26,500) 2,700 50,100 26,300 254,478 9.20 85,017 21,007 47,769 LTM Ended 6/30/12 111,626 111,626 35.44 35.44 12.92 (1.00) 17.00 3.99 5.16 5.16 1.07 1.07 3.99 0.18 0.59 2.54 3.39 2.62 2.24 2.62 2.24 7.51 0.28 791,737 43,107 82,674 209,918 292,592 292,592 292,592 376,133 668,725 64,787 (3,387) 61,400 (24,200) (40,000) (2,800) 12,100 9,300 314,987 41.33 99,838 21,645 61,976
99
Corporates
Cresud S.A.C.I.F. y A.
B B/RR4 B
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR
Rating Outlooks
Leading Position in Real Estate and Agribusiness Sectors: Cresud S.A.C.I.F. y A. (Cresud) owns 64.2% of IRSA (BB local currency issuer default rating [IDR]), a leading real estate company in Argentina dedicated to real estate development, office rentals, and shopping mall operations through its subsidiary, Alto Palermo (APSA). As of June 30, 2012, Inversiones y Representaciones S.A. (IRSA) represented the total of Cresuds consolidated EBITDA (due to negative results in the agribusiness segment), and 66% of consolidated assets. Additionally, Cresud has a growing presence in the agribusiness sector, acquiring farms with the intent to benefit from an appreciation of the lands value over the medium to long term. Rating Linkage to IRSA Results in Structural Subordination of Credit Rating: Fitch Ratings links the ratings of Cresud and IRSA. This linkage reflects factors such as strong strategic and operational ties and the fact that IRSAs upstream dividends represent a significant part of Cresuds cash flow from operations. Cresuds local currency IDR is notched down from IRSAs rating because of the structural subordination of its debt and its weaker stand-alone financial profile. The dividend flow to Cresud from IRSA is expected to be relatively stable. During 2011, the company received dividends of USD14 million in June and USD31 million in November, while in June 2012 it received another USD14 million from IRSA. Foreign Currency IDR Constrained: Cresuds foreign currency IDR is constrained at B due to the B country ceiling of Argentina, which also has a foreign currency credit rating of B. Country ceilings capture the risk of exchange controls being imposed that would prevent or materially impede the private sectors ability to convert local currency into foreign currency and transfer the proceeds to nonresident creditors transfer and convertibility (T&C) risk. Cyclical Cash Generation: Cresuds ratings are constrained by above-average risks associated with operating in the real estate segment in Argentina. Due to weather conditions and commodity prices, the cash flow of its agribusiness division is also volatile. Cresud has an important portfolio of farms in Argentina and also has a presence in Bolivia, Paraguay, and in Brazil through its 39.64% stake in BrasilAgro. Strong Asset Portfolio and Moderate Leverage: Cresuds leverage is moderate and its liquidity is manageable, as a result of unencumbered assets and land that could be sold. Regarding the real estate industry, the emphasis of Fitchs methodology is on portfolio quality, diversity, and size. Cresuds consolidated portfolio of real estate assets is strong with USD1.6 billion of undepreciated book capital as of June 30, 2012. The companys leverage, measured by consolidated net debt as a percentage of undepreciated book capital of real estate assets, was 47%. This percentage would be even lower at market values.
Financial Data
Cresud S.A.C.I.F. y A. (USD Mil.) Revenue EBITDA Cash Flow from Operations (CFFO) Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/EBITDA (x) CFFO/Net Debt (x) 6/30/12 641.1 207.7 124.9 110.0 858.4 4.1 3.6 0.2 6/30/11 533.5 231.0 95.1 171.8 827.9 3.6 2.8 0.1

Analysts
Fernando Torres +54 11 5235-8124 fernando.torres@fitchratings.com Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com
Key Rating Drivers: The Stable Outlook reflects Fitchs expectation that Cresud will manage its balance sheet to a consolidated ratio of net debt-to-EBITDA of around 4.0x. Any significant increase in Cresud's leverage ratio would weaken credit quality and could result in a negative rating action. Cresuds ratings would also be affected by an upgrade or downgrade of the Argentinas country ceiling.
100
Corporates
Recovery Rating
The recovery ratings for Cresuds capital markets debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery of between 30% and 50%. This recovery was capped at the RR4 level, which is the common recovery ceiling for debt issued in Argentina. Absent this cap, Fitchs bespoke analysis indicates that the leverage of the company would lead to a recovery of approximately 65%. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is consistent with the value observed in the Buenos Aires stock exchange during the last year.
Recovery Analysis Cresud S.A.C.I.F y A.

(USD Mil.) Available to Creditors 113 97 228 438 Going Concern Enterprise Value June 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
208 25 156 4.0 623 92 50 142 623 62 561
110.0 140.9 194.7 1,138.8
561 561 28 533
Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 0.0 Recovery (%) 0 0 Concession Allocation (%) 100 Notching Rating

a
Lien 858
Value Recovered Recovery (%) 561 65
Notching
Rating B
Cresuds recovery rating is capped at the level of RR4 due to concerns about the low probability of high recoveries for bondholders of corporates domiciled in Argentina. The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Source: Fitch Ratings.
101
Corporates
Organizational Structure Cresud S.A.C.I.F. y A.
FYE June 2012 Summary Statistics

USD208 Million of EBITDA USD110 Million of Cash and Marketable Securities USD858 Million of Total Debt
Cresud S.A.C.F. y A.
USD60 Million Notes Due 2014
64.20%
39.64%
65.85%
100.00%
35.72%
100.00%
100%
95.12%
46.84%
IRSA S.A.
Brasil Agro
FyO COM
96.37%
Cactus Argentina
100% 2.2%
AgroUranga
Helmir S.A.
Agrotech
Agropecuaria A cres del Sud Ombu Agropecuaria Yatay Agropecuaria Yutan Agropecuaria
Agro Managers
FyO Trading
Exportaciones Agroindustriales Argentinas (EAASA)
Pluriagro
Northagro
Source: Fitch and Cresud S.A.C.I.F. y A.s public information.
4.48%
102
Corporates
Debt and Covenant Synopsis Cresud S.A.C.I.F. y A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Cresud S.A.C.I.F. y A. N.A. Aug. 29, 2011 Sept. 7, 2014 Senior Unsecured Notes N.A. N.A. Change of control clause at 100% of principal. If the issuer at any time ceases to beneficially own, directly or indirectly, at least 45% of the voting power of the Voting Stock of IRSA or ceases to have the right to appoint at least the majority of the members of the board of directors of IRSA, then, each holder will have the right to require that the issuer purchase all of the holders notes at a purchase price equal to 100% of the principal amount. The issuer may only incur additional indebtedness if, and immediately after giving pro forma effect to the incurrence, the ratio of (i) the amount of the issuer's unconsolidated short-term indebtedness, to (ii) its total assets, as specified in the issuers most recently available basic quarterly financial statements prior to the date of such incurrence, is lower than 0.35x. Transactions with affiliates are permitted as long as: 1) the terms of the transaction are not substantially less favorable than those that could be achieved with a nonrelated party; 2) the terms of such transactions are in compliance with the applicable laws, regulations, and pronouncements. Restrictions on merger or consolidation of issuer. Exceptions include the merger of other entities with the issuer provided that surviving entity will be the issuer.
Other Transactions with Affiliates Limitation on Secured Debt
103
Corporates
Financial Summary Cresud S.A.C.I.F. y A.
(ARS 000, Fiscal Year Ended June) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Note: Cresud has consolidated with IRSA's figures since October 2008. Source: Companys financial statements and Fitch Ratings. 2012 893,336 32.4 10.8 5.9 1.8 2.2 2.3 0.6 2.2 0.4 0.7 2.2 4.5 4.3 3.8 10.9 0.3 9,755,212 497,498 1,095,235 2,787,945 3,883,180 3,883,180 0 3,883,180 4,054,059 7,937,239 460,153 77,034 537,187 0 (241,683) (134,129) 161,375 (369,683) (133,031) 107,005 74,079 4,542 (155,713) 2,757,419 29.2 654,489 396,221 0 78,263 2011 924,147 43.3 11.0 1.0 5.2 3.0 3.2 0.6 3.0 0.2 0.6 2.2 3.9 3.7 2.9 10.9 0.4 9,733,418 706,021 1,316,232 2,086,305 3,402,537 3,402,537 0 3,402,537 4,559,985 7,962,522 587,065 (206,469) 380,596 0 (169,634) (190,406) 20,556 (703,121) 67,127 1,144,521 808 0 529,891 2,133,827 28.2 729,629 290,854 0 212,565 2010 763,736 45.9 9.3 (7.4) 5.4 2.8 4.2 0.6 2.8 0.0 0.3 0.9 3.7 2.5 2.1 11.0 0.6 6,837,888 296,797 1,059,736 853,166 1,912,902 1,912,902 0 1,912,902 3,593,201 5,506,103 329,234 (155,139) 174,095 0 (199,674) (97,262) (122,841) (320,548) (9,703) 397,706 19,363 0 (36,023) 1,664,634 32.7 581,158 181,806 0 185,406 2009 330,659 26.4 8.7 (4.1) 5.0 3.2 2.6 0.5 3.2 0.1 0.4 1.0 3.5 4.2 3.6 16.0 0.4 5,976,056 211,676 536,888 866,700 1,403,588 1,403,588 0 1,403,588 3,248,866 4,652,454 278,410 21,126 299,536 0 (308,328) (43,065) (51,857) (71,338) 12,487 (150,779) (47,960) 37 (309,410) 1,254,663 671.7 210,720 128,270 0 124,616 2008 40,977 28.2 (0.6) (74.4) 1.8 (0.5) 1.8 0.2 (0.5) (0.4) 2.0 (4.1) (16.3) 4.7 (8.0) 13.7 1.0 2,057,714 521,107 193,106 193,106 193,106 0 193,106 1,762,338 1,955,444 (35,175) (44,995) (80,170) 0 (19,597) (8,250) (108,017) (313,235) (65,883) 31,017 881,117 11,455 436,454 145,267 49.6 35,760 23,339 0 22,948 2007 38,817 40.0 2.3 (77.1) 6.8 1.7 3.1 0.3 1.7 (0.5) 0.2 (2.6) 6.3 3.6 1.4 8.1 0.8 1,065,302 84,925 122,749 24,744 147,493 8,668 138,825 0 147,493 824,953 972,446 9,394 (59,354) (49,960) 0 (19,393) (5,500) (74,853) (727) 13,007 39,369 0 81,945 58,741 97,093 (2.9) 34,792 12,699 0 49,362
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Corporates
Financial Summary Cresud S.A.C.I.F. y A.
Period-End Exchange Rate Average Exchange Rate (USD 000, Fiscal Year Ended June 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Cresud has consolidated with IRSA's figures since October 2008. Source: Fitch Ratings. 2012 207,695 32.4 10.8 5.9 1.8 2.2 2.3 0.6 2.2 0.4 0.7 2.2 4.3 4.1 3.6 10.9 0.3 2,156,420 109,973 242,105 616,284 858,389 858,389 0 858,389 896,162 1,754,551 106,982 17,910 124,892 0 (56,190) (31,184) 37,519 (85,949) (30,929) 24,878 17,223 1,056 (36,202) 641,081 20.2 152,164 92,119 0 18,196 2011 231,048 43.3 11.0 1.0 5.3 3.0 3.2 0.6 3.0 0.2 0.6 2.2 3.8 3.6 2.8 11.1 0.4 2,368,228 171,781 320,251 507,617 827,868 827,868 0 827,868 1,109,485 1,937,353 146,774 (51,620) 95,154 0 (42,411) (47,604) 5,139 (175,789) 16,783 286,145 202 0 132,479 533,483 23.3 182,416 72,717 0 53,144 2010 198,590 45.9 9.3 (7.4) 5.4 2.8 4.2 0.6 2.8 0.0 0.3 0.9 3.7 2.4 2.1 11.0 0.6 1,739,168 75,488 269,536 216,997 486,533 486,533 0 486,533 913,905 1,400,438 85,609 (40,340) 45,269 0 (51,920) (25,290) (31,942) (83,350) (2,523) 103,413 5,035 0 (9,367) 432,845 17.6 151,115 47,274 0 48,210 2009 96,979 26.4 8.7 (4.1) 5.1 3.2 2.6 0.5 3.2 0.1 0.4 1.0 3.1 3.8 3.2 17.3 0.4 1,575,756 55,814 141,566 228,530 370,096 370,096 0 370,096 856,656 1,226,752 81,655 6,196 87,851 0 (90,429) (12,631) (15,209) (20,923) 3,662 (44,222) (14,066) 11 (90,747) 367,980 607.2 61,802 37,620 0 36,549 2008 13,053 28.2 (0.6) (74.4) 1.7 (0.5) 1.8 0.2 (0.5) (0.4) 2.0 (4.1) (16.9) 4.9 (8.3) 13.3 1.0 680,348 172,295 63,847 63,847 63,847 0 63,847 582,687 646,534 (11,205) (14,333) (25,538) 0 (6,242) (2,628) (34,408) (99,779) (20,987) 9,880 280,673 3,649 139,029 46,274 47.1 11,391 7,434 0 7,310 2007 12,578 40.0 2.3 (77.1) 6.8 1.7 3.1 0.3 1.7 (0.5) 0.2 (2.6) 6.7 3.8 1.6 8.1 0.8 344,702 27,479 39,718 8,006 47,724 47,724 0 47,724 266,932 314,656 3,044 (19,233) (16,189) 0 (6,284) (1,782) (24,255) (236) 4,215 12,757 0 26,553 19,034 31,461 (5.6) 11,274 4,115 0 15,995 4.5238 4.3012 4.1100 3.9998 3.9317 3.8458 3.7925 3.4096 3.0235 3.1247 3.0905 3.0861
105
Corporates
Digicel Group Limited
And Subsidiaries
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Local Currency Long-Term IDR Secured (DIFL) Senior Unsecured (DL) Subordinated (DGL) B B B+/RR3 B/RR4 B/RR5
Key Rating Drivers

High Leverage but Solid Operations: Digicel Group Limiteds (DGL) ratings are supported by its position as the leading provider of wireless services in most of its markets in the Caribbean and its strong operating track record. The ratings are constrained by high leverage and the companys exposure to low-rated countries, as about 40% of its cash flow is generated in Jamaica and Haiti. Acquisitions Improving Competitive Position: The recent acquisitions of Voila in Haiti and the transaction with America Movil, where the El Salvador division is pending regulatory approval, will strengthen the companys competitive position in its top markets, Jamaica and Haiti. In addition, the company has a minority stake in M-Via (rebranded to Boom Financial), a 51% stake in Nextar, and a 100% ownership stake in Data Nets, based in Papua New Guinea (PNG). Jamaicas New Regulation and Taxes Manageable: Leverage is not expected to materially change considering the effect on EBITDA of new regulation and taxes in Jamaica. This effect is expected to be offset by continued growth from Haiti and PNG. Broadband Strategy: Digicel is pursuing service offerings using Wimax, HSPA+, or 4G networks for delivering broadband services in the markets where the company participates. These investments will take advantage of the low fixed-line penetration rates. These initiatives underpin revenue from value-added services as they accounted for 20% of revenues in the quarter ended June 30, 2012. Lower Capex: The capex-to-revenue ratio approached 17.5% during fiscal 2012 and is expected to trend towards 10% in the next few years. The decline in the capex ratio should have a positive effect on free cash flow amid a stable dividend policy of USD40 million per year. DGL paid a USD300 million special dividend during the first quarter of fiscal 2013. Parent Subsidiary Rating Linkage: Under Fitchs approach to rating entities within a corporate group structure, the issuer default ratings (IDRs) of DGL, Digicel Limited (DL), and Digicel International Finance Limited (DIFL) are the same. The degree of linkage between the parent company and its subsidiaries is considered strong. Recovery Prospects: For issue ratings, Fitch rates debt at DIFL one notch higher than DL, reflecting its above-average recovery prospects. DLs ratings reflect the increased burden the DGL subordinated notes place on the operating assets and the loss of financial flexibility. The ratings of DGL incorporate their subordination to debt at DIFL and DL, as well as the subordinated notes below-average recovery prospects in the event of default.
IDR Issuer default rating. DIFL Digicel International Finance Ltd. DL Digicel Ltd. DGL Digicel Group Ltd.
Rating Outlooks
Financial Data
Digicel Group Limited (USD 000) Revenue Operating EBITDAR Operating EBITDAR/ Revenues (%) Cash Flow from Operations Free Cash Flow Operating EBITDAR/Fixed Charges (x) Total Adjusted Debt with Equity Credit/Operating EBITDAR (x) 6/30/12 3/31/12 2,481,860 2,408,679 1,097,533 1,070,825 44.2 478,778 (260,567) 2.4 44.5 505,244 82,620 2.3
4.7
4.8
Analysts
Sergio Rodriguez, CFA +52 81 8399-9100 sergio.rodriguez@fitchratings.com John C. Culver, CFA +1 312 368-3216 john.culver@fitchratings.com

Increased Leverage/Refinancing Risk: A negative rating action could be triggered if consolidated leverage at DGL approaches 6.0x. The inability to refinance sizeable bullet maturities in advance especially those due in 2014 or 2015 could also lead to a rating action. Short-term upside potential is limited. Positive factors for credit quality would be a sustained reduction in leverage at DGL to about 4.0x or below and an increase in free cash flow generation.
106
Corporates
Digicel Group Limited Corporate Structure
(USD Mil.)
Digicel Group Limited (Bermuda) Unconsolidated Debt 190 Consolidated Debt 4,874 EBITDA 1,070 Consolidated D/E = 4.6x
100%
43.4%
100%
Digicel Holdings Central America Limited
Digicel Limited (Bermuda)

100%
Unconsolidated Debt 1,560 Consolidated Debt 2,472 EBITDA 860 D/E = 2.9x
Digicel Pacific Limited
Digicel Holdings (Bermuda) Ltd (Bermuda)

100%
Debt 211 EBITDA 210 D/E = 1.0x
Digicel International Finance Limited (St. Lucia)
Debt 912 EBITDA 860 D/E = 1.1x
Operating Companies
Debt 0 EBITDA 860 D/E = N.A.
Note: Data for the last 12 months ended June 30, 2012. N.A. Not applicable. D/E Debt/EBITDA. Source: Digicel audited and internal financial statements, Fitch.
Capitalization Digicel Group Limited

(Capitalization as of June 30, 2012; USD Mil.) DGL Sr. Unsecured Notes due 2015 including Toggle Notes DGL Sr. Unsecured Notes due 2018 DPL Debt DL Sr. Unsecured Notes due 2014 DL Sr. Unsecured Notes due 2017 DL Sr. Unsecured Notes due 2020 DIFL Secured Credit Facility Total Debt w/Equity Credit Minority Interest Majority Shareholders Equity Total Shareholders Adjusted Equity Total Capitalization Debt to LTM EBITDA (x) Debt to L2QA EBITDA (x) Ratings B/RR5 B/RR5 N.R. B/RR4 B/RR4 B/RR4 B+/RR3 Amount 1,415 775 212 510 800 250 912 4,874 19 (1,497) (1,479) 3,395 4.6 4.3 (%) 41.7 22.8 6.2 15.0 23.6 7.4 26.9 143.5 0.6 (44.1) (43.5) 100.0 Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 Total Scheduled Debt Maturities 105 613 1,773 295 263 1,575 250 4,874
Liquidity Cash and Cash Equivalents
343
L2QA EBITDA Last two quarters EBITDA annualized. LTM Last 12 months. N.R. Not rated. RR Recovery rating. Source: Fitch.
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Corporates
Recovery Analysis Digicel Group Limited
(USD Mil.) IDR: B Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Available to Rate (%) Creditors 100 342.8 75 357.7 50 18.7 50 929.0 1,648.2 Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total 1,070.3 35.0 696 5.0 3,478.4 342.8 476.9 37.4 1,858.0 2,715.1
3,478.4 347.8 3,130.6
Value Recovered 1,136.0 1,560.0 434.6 Recovery (%) 100 100 20 Recovery Rating RR3 RR4 RR5
Unsecured Priority Issuer Default Rating First Priority Secured Senior Unsecured Senior Subordinated
a
Lien 1,136.0 1,560.0 2,190.0
Notching +1 0 (1)
Rating B B+a Bb B
Limited to one notch due to soft cap methodology. bNo notch benefit due to soft cap methodology. PPE Property, plant, and equipment. Source: Fitch.
108
Corporates
Debt and Covenant Synopsis Digicel Group Limited
Debt Class
Digicel International Finance Ltd. (DIFL) New Extended Facility
Security
First priority lien on all assets.
Financial Covenants
Other
Total Debt/EBITDA < 4.0x Sr. Secured debt/EBITDA < 2.25x EBITDA/Interest Expense > Restrictions on investments, debt liens, acquisitions, and 3.0x restricted payments. The indenture governing the 2014 notes, among other things, restricts DLs ability and the ability of certain of its subsidiaries to incur additional indebtedness and issue preferred stock, pay dividends, make investments or certain other restricted payments, create liens, engage in sale-leaseback transactions, guarantee debt, and engage in mergers, consolidations, and certain sales or leases of our properties and assets. The notes also have a changeof-control clause at 101% of the principal and the same optional redemption for up to 35% of the aggregate principal at a redemption price of 112 from April 1, 2012. The indenture governing the 2017 notes, among other things, restricts DLs ability and the ability of certain of its subsidiaries to incur additional indebtedness and issue preferred stock, pay dividends, make investments or certain other restricted payments, create liens, engage in sale-leaseback transactions, guarantee debt, and engage in mergers, consolidations, and certain sales or leases of our properties and assets. The indenture governing the 2014 notes, among other things, restricts DLs ability and the ability of certain of its subsidiaries to incur additional indebtedness and issue preferred stock, pay dividends, make investments or certain other restricted payments, create liens, engage in sale-leaseback transactions, guarantee debt, and engage in mergers, consolidations, and certain sales or leases of our properties and assets. The notes also have a changeof-control clause at 101% of the principal and the same optional redemption for up to 35% of the aggregate principal at a redemption price of 112 from April 1, 2012. Customary project finance covenants and a USD28 million contingent equity commitment. Customary project finance covenants and a USD30 million contingent equity commitment. Certain covenants limit the companys ability to incur additional indebtedness, pay dividends or other distributions with respect to capital stock, provide guarantees, or consolidate, merge, or transfer substantially all assets. The notes also have a change-ofcontrol clause at 101% of the principal and the same optional redemption for up to 35% of the aggregate principal at a redemption price of 108.875 for the senior notes and 108.125 for the toggle notes starting in 2010 and stepping down to 104.438%/104.563% (cash/toggle) on Jan. 15, 2012. Certain covenants limit the companys ability to incur additional indebtedness, pay dividends or other distributions with respect to capital stock, provide guarantees, or consolidate, merge, or transfer substantially all assets. The notes also have a change-ofcontrol clause at 101% of the principal and an optional redemption for up to 35% of the aggregate principal at 110.5% of par value prior to April 15, 2013. On and after April 15, 2014 the notes are redeemable at 105.25% of par value declining at a rate of 1.75% per year until 2017.
Digicel Limited (DL) 2014 Senior Notes
Senior unsecured guaranteed on a senior subordinated basis by certain wholly owned Digicel Total Debt/EBITDA < 3.25x Sr. Secured subsidiaries. debt/EBITDA < 1.75x
DL 2017 Senior Notes
Senior unsecured guaranteed on a senior subordinated basis by certain wholly owned Digicel Total Debt/EBITDA < 4.0x Sr. Secured subsidiaries. debt/EBITDA < 2.25x
DL 2020 Senior Notes Digicel Pacific Finance Limited (DPFL) Facility
Senior unsecured guaranteed on a senior subordinated basis by certain wholly owned Digicel Total Debt/EBITDA < 3.25x Sr. Secured subsidiaries. debt/EBITDA < 1.75x All shares and assets of DPFL and restricted subsidiaries of Samoa, Total Debt/EBITDA < 2.71x by March 2012 Tonga, Vanuatu and Fiji. EBITDA/Interest Expense > 4.25x Total Debt/EBITDA < 2.0x by March 2012 EBITDA/Interest Expense > 4.0x
All shares and assets of Digicel Digicel Papua New Guinea (PNG) PNG.
DGL 2015 Senior Notes & Toggle Notes
Senior unsecured and structurally subordinated.
Total Debt/EBITDA < 6.0x Total Debt/EBITDA of restricted subsidiaries < 4.5x
DGL 2018 Senior Notes
Senior unsecured and structurally subordinated.
Total Debt/EBITDA < 6.0x
Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents, including bond indentures. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company, Fitch.
109
Corporates
Financial Summary Digicel Group Limited
(USD Mil., Year Ended June 30) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financial) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 1,070,281 1,097,533 43.1 44.2 0.28 (10.5) 1.1 2.4 2.7 2.6 1.7 1.7 2.4 0.2 0.8 1.1 5.1 4.6 4.2 4.7 4.3 8.5 0.0 4,370,699 342,792 227,536 4,659,290 4,886,826 4,886,826 218,016 5,104,842 (1,478,954) 3,625,888 575,640 (96,862) 478,778 0 (428,469) (425,876) (260,567) (376,710) 138,765 214,873 0 (6,627) (405,266) 2,481,860 14.1 611,780 398,552 27,252 (13,685) 2012 1,041,572 1,070,825 43.2 44.5 0.25 3.4 (4.1) 2.4 2.6 2.5 1.7 1.7 2.3 0.8 1.9 1.2 5.2 4.7 4.1 4.8 4.2 8.4 0.0 4,662,259 656,604 210,548 4,673,624 4,884,172 4,884,172 234,024 5,118,196 (1,162,797) 3,955,399 552,863 (47,619) 505,244 0 (421,748) (115,876) 82,620 (362,733) 114,638 320,861 0 2,883 43,269 2,408,679 15.1 616,021 394,397 29,253 47,233 2011 918,725 938,258 43.9 44.8 0.24 6.4 (3.7) 2.2 2.4 2.4 1.2 1.2 2.2 0.7 1.5 1.5 5.5 4.9 4.3 5.0 4.3 9.0 0.1 4,219,283 613,335 387,528 4,140,669 4,528,197 4,528,197 156,264 4,684,461 (1,153,591) 3,530,870 456,536 (24,804) 431,732 0 (294,585) (45,322) 133,918 (766,647) (109,119) 367,478 0 (11,050) (427,513) 2,092,869 19.8 558,838 375,040 19,533 43,158 2010 752,506 773,741 43.1 44.3 0.26 15.5 12.2 2.6 2.8 2.7 1.7 1.7 2.5 1.2 3.7 2.7 5.5 5.0 3.7 5.1 3.8 7.6 0.0 3,188,219 1,040,848 166,050 3,626,948 3,792,998 3,792,998 169,880 3,962,878 (1,173,058) 2,789,820 431,142 4,042 435,184 0 (159,592) (44,728) 270,854 (273,716) 23,250 585,426 500 (16,048) 550,276 1,747,415 0.9 464,693 264,890 21,235 (131,679) 2009 752,506 773,741 43.1 44.3 0.26 15.5 12.2 2.6 2.8 2.7 1.7 1.7 2.5 1.2 3.7 2.7 5.5 5.0 3.7 5.1 3.8 7.6 0.0 3,188,219 1,040,848 166,050 3,626,948 3,792,998 3,792,998 169,880 3,962,878 (1,173,058) 2,789,820 431,142 4,042 435,184 0 (159,592) (44,728) 270,854 (273,716) 23,250 585,426 500 (16,048) 550,276 1,747,415 0.9 464,693 264,890 21,235 (131,679)
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Corporates
Empresa Generadora de Electricidad Haina, S.A.
(Haina)
Full Rating Report
Ratings
Foreign Currency Long-Term FC IDR Long-Term LC IDR Senior Unsecured B B B
Key Rating Drivers

High Risk Sector: The Dominican Republic power sector is characterized by low collections from end users and high electricity losses. Such conditions have undermined distribution companies (DISCOs) cash flow generation, leaving them dependent on government subsidies to honor their accounts payable to the Dominican generation companies. This links the credit quality of the distribution and generation companies in the country to that of the sovereign.
Transition Risk Diminishes: The incumbent partys electoral victory in the presidential elections held during May 2012 partially diminishes the political uncertainty that had prevailed during the first half of the year. For Empresa Generadora de Electricidad Haina, S.A. (Haina), the results lowered the risk of noncontinuous policies aimed at strengthening the financial viability of the Dominican electricity sector, as agreed to under the last IMF Standby agreement, which expired in February 2012. Key political measures needed to achieve a financially viable sector in the medium term include a gradual adjustment to tariffs, increases in the DISCOs cash recovery index (CRI) to 70% from the historical lows of 50%, and the reduction of days receivables from generating companies to a 60-day average.
Rating Outlook
Long-Term LC/FC IDR Positive
Financial Data
Haina S.A. (USD Mil.) Revenue EBITDA EBITDA Margin (%) FFO CFFO FCF FFO Interest Coverage (x) Total Debt Total Debt/ EBITDA (x) EBITDA/Debt Service Coverage (x) LTM 3/31/12 12/31/11 648 618 119 18.4 99 82 (24) 5.5 301 2.5 1.7 112 18.2 83 41 (10) 5.4 281 2.5 1.7
Competitive Generation Assets: Hainas ratings are supported by its diversified portfolio of generation assets, including wind generation, the use of various sources of fuel in its plants, and its strong market position and operational efficiency. These plants use fuel oil, diesel, and coal. This diversification provides the company with different positions on the dispatch merit list. Hainas operational efficiency compares favorably with other generating companies in the country, registering an average heat rate of 9.526 British thermal units (Btu) per kilowatt-hour (kWh). Its most efficient unit registers a 7.800 Btu/kWh heat rate burning heavy fuel oil, also known as fuel oil No. 6. Strong Credit Metrics: Hainas credit metrics are strong relative to other B rated companies. For the LTM ended March 31, 2012, the company reported an EBITDA of USD119 million (USD112 million in fiscal 2011) and had an 18.4% EBITDA margin. Respectively, leverage and debt service coverage stood at 2.5x and 1.7x in relation to EBITDA as of March 31, 2012. Volatile Cash Flow Generation and Collection: For the LTM ended March 31, 2012, the company generated USD82 million of CFFO, an increase from USD41 million in 2011. Like other generators, the company struggles to collect receivables from distribution companies. At the end of first-quarter 2012, days receivable outstanding totaled 120 days, which is equivalent to four invoice periods. The collection rate was 54% during this period. With USD149 million of cash on hand, liquidity is high at 3x short-term debt.
Analysts

Key Rating Drivers: Lower dependence of the sector on government subsidies could lead to a rating upgrade. The ratings would also be positively affected by a positive rating action on the sovereign.
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Corporates
Recovery Analysis
Hainas issuance has been assigned a recovery rating of RR4. The recovery was based upon the treatment of Haina as a going concern since a liquidation scenario is considered highly unlikely. The ratings have been capped at RR4 due to concerns about the low probability of high recoveries for bondholders of corporates domiciled in the Dominican Republic. Hainas debt issuance is not guaranteed by any specific asset but rather by all of the companys assets with no subordination with respect to any instrument. Fitch currently maintains a positive outlook for the sovereign, and as such we do not foresee a bankruptcy scenario for Haina in the near future, unless a low probability event such as a severe fiscal crisis materializes that would severely impact the companys cash flow. The distressed EBITDA of Haina was calculated to cover the companys fixed charges and critical maintenance capex. This EBITDA was multiplied by a conservative 5x multiple to arrive at a distressed company valuation. This distressed valuation would be associated with a severe fiscal crisis that would lead to a sustained cash flow drain for all generating companies in the country and contemplates the low probability event of a nonfriendly renegotiation scenario of the companys PPAs with distribution companies to the detriment of Haina. In this hypothetical scenario, it would be reasonable to expect a low demand for the companys assets under a competitive bidding process, further supporting the distressed valuation commented above.
Recovery Analysis Empresa Generadora de Electricidad Haina, S.A.

(USD Mil.) Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Distressed EBITDA Market Multiple (x) Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Principal Amortization (Next 12 Months) Amount Outstanding and Available R/C 227.0 IDR: B
119.0 63.0 44.0 5.0 220.0
22 10 12 Value Recovered 198.0
Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Recovery Rate (%) 87 Recovery Rating RR2
220.0 22.0 198.0
Unsecured Priority Issuer Default Rating Senior Unsecured Subordinated Junior Subordinated Source: Fitch.
Notching +2
Rating B BB
112
Corporates
Organizational Structure Empresa Generadora de Electricidad Haina S.A.
Basic Energy 31.08%
Caribe Energy Ltd. 44.51%
Other 24.41%
Dominican Republic Haina Investment Company Ltd. (IDR B) Through FONPER 50.00% 50.00%
Empresa Generadora de electricidad Haina S.A. Operating Company (Guarantor) IDR B
EGE Haina Finance Company (Issuer) USD175 Mil. Senior Unsecured Notes Rating B
Source: Empresa Generadora de Electricidad Haina S.A.
113
Corporates
Debt and Covenant Synopsis Empresa Generadora de Electricidad Haina, S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) (x) Interest Coverage (Minimum) (x) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction
EGE Haina Finance Company Empresa Generadora de Electricidad Haina, S.A. May 11, 2007 April 26, 2017 Senior Unsecured Notes
3.5 2.5 Change-of-control clause at 101% of principal. Generally permits asset sales as long as it is divested at least equal to fair market value, Haina receives at least a 75% cash payment, and the proceeds are used to reduce debt or are reinvested. The issuer is not allowed to incur additional debt. The guarantor is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. The guarantor can incur additional indebtedness in an aggregate principal amount not to exceed $25 million. Haina is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. The issuer is not permitted to pay any dividends or make any other distribution to its shareholders. The guarantor is not permitted to make any restricted payments if, among other clauses, it cannot incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceed 100% of combined net income. If the issuer, guarantor, or any restricted subsidiary defaults on any indebtedness of at least USD20 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to, the interest reserve not being fully funded for more than five days and if the issuer, guarantor or any restricted subsidiary defaults in any indebtedness of at least USD20 million. The issuer is allowed to redeem the notes in whole or in part at a preset redemption price.
Restriction on Purchase of Notes Source: Company and Fitch Ratings.
114
Corporates
Financial Summary Empresa Generadora de Electricidad Haina, S.A.
(USD Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 3/31/12 118,846 118,846 18.4 18.4 17.4 (3.7) 18.3 5.5 5.4 5.4 1.7 1.7 5.5 0.0 2.1 0.9 2.5 2.5 1.3 2.5 1.3 8.6 0.2 824,452 149,333 47,700 253,311 301,011 301,011 0 301,011 394,305 695,316 99,035 (16,588) 82,447 0 (92,450) (13,999) (24,002) 14 15,649 90,243 0 (5,579) 76,325 647,558 4.9 101,435 22,026 0 67,458 2011 112,243 112,243 18.2 18.2 15.6 (1.7) 18.7 5.4 5.9 5.9 1.7 1.7 5.4 0.1 2.9 1.1 2.8 2.5 0.9 2.5 0.9 7.8 0.2 741,466 183,879 47,656 233,750 281,406 281,406 0 281,406 375,160 656,566 83,227 (42,154) 41,073 0 (37,539) (13,999) (10,465) 60 9,035 74,840 0 (514) 72,956 617,540 46.2 95,895 18,922 0 65,470 2010 78,649 78,649 18.6 18.6 16.0 12.5 13.6 4.2 3.9 3.9 2.0 2.0 4.2 1.8 4.6 2.7 2.4 2.6 1.2 2.6 1.2 9.9 0.09 583,385 110,924 19,600 186,967 206,567 206,567 0 206,567 324,181 530,748 64,707 35,110 99,817 0 (37,099) (9,997) 52,721 0 14,488 4,200 0 (30) 71,379 422,509 37.5 62,567 20,304 0 41,975 2009 44,555 44,555 14.5 14.5 9.1 (14.1) 4.7 1.7 1.7 1.7 1.4 1.4 1.7 (0.5) 0.7 (2.9) 4.5 4.5 3.7 4.5 3.7 13.6 0.03 554,309 39,548 6,000 196,367 202,367 202,367 0 202,367 291,804 494,171 19,021 (36,323) (17,302) 0 (5,881) (20,003) (43,186) 0 32,978 27,737 0 (322) 17,207 307,198 (33.3) 29,015 25,837 0 14,403 2008 74,174 74,174 16.1 16.1 18.0 (6.7) 12.6 3.7 3.1 3.1 2.9 2.9 3.7 (0.3) 0.6 0.4 2.0 2.4 2.1 2.4 2.1 13.1 0.01 584,234 22,340 1,703 175,000 176,703 176,703 0 176,703 316,687 493,390 65,116 (58,979) 6,137 0 (17,098) (20,000) (30,961) 0 16,986 (10,738) 0 0 (24,713) 460,567 0.3 58,870 23,792 0 38,934
115
Corporates
Empresa Generadora de Electricidad Itabo, S.A.
(Itabo)
Full Rating Report
Ratings
Foreign Currency Long-Term FC IDR Long-Term LC IDR Senior Unsecured B B B
Key Rating Drivers

High Risk Sector: The Dominican Republic power sector is characterized by low collections from end users and high electricity losses. Such conditions have undermined distribution companies (DISCOs) cash flow generation, leaving them dependent on government subsidies to honor their accounts payable to the Dominican generation companies. This links the credit quality of the distribution and generation companies in the country to that of the sovereign and has resulted in historically high levels of volatility in cash flows for the generators. Transition Risk in 2012: The incumbent partys electoral victory in the presidential elections held during May 2012 partially diminishes the political uncertainty that had prevailed during the first half of the year. For Empresa Generadora de Electricidad Itabo, S.A., the results lowered the risk that the new government would discontinue policies aimed at strengthening the financial viability of the Dominican electricity sector, as agreed to under the last IMF Standby agreement, which expired in February 2012. Key political measures needed to achieve a financially viable sector in the medium term include a gradual adjustment to tariffs, increases in the DISCOs cash recovery index (CRI) to 70% from the historical lows of 50% in order to reduce their dependence on government funding to pay for their electricity bill, and the reduction of days receivables from generating companies to a 60-day average. Well-Structured PPAs Support the Ratings: Itabos ratings are supported by its strong competitive position as one of the lower cost thermoelectric generators in the country. The company operates two low-cost coal-fired thermal generating units and sells electricity to three distribution companies in the country through well-structured, long-term, U.S. dollardenominated power purchase agreements (PPAs). Financial Profile Evolution: The companys financial profile improved slightly during the first quarter of 2012. This improvement occurred following the optimization of its coal cash cost, in a context of rising electricity prices and moderate demand growth. These factors allowed the company to register an EBITDA of USD39 million for the LTM ended March 31, 2012. This compares with USD27 million in 2011. Leverage was 3.3x as of March 31, 2011, which is relatively low for the category. Volatile Cash Flow Generation: Itabos cash flow from operations (CFFO) was USD16 million during the LTM. This is a moderate improvement versus USD14 million of CFFO in 2011. Itabo registered an average collection rate from distribution companies of 57% of total account receivable billing during the first quarter of 2012, slightly above the collection rate achieved during the same period last year (50%). Days receivables outstanding stood at 106 at the end of March, a deterioration from 72 at the end of 2011. Liquidity is relatively strong. The company had USD44 million of cash on hand at the end of March and no short-term debt.
Rating Outlook
Long-Term LC/FC IDR Positive
Financial Data
Itabo S.A. (USD Mil.) Total Assets Total Equity Net Income EBITDA Total Debt LTM 3/31/12 580 337 (3) 39 129 12/31/11 570 328 (6) 27 129
Analysts

Key Rating Drivers: Lower dependence of the sector on government subsidies could lead to a rating upgrade. The ratings would also be positively affected by a positive rating action on the sovereign.
116
Corporates
Recovery Analysis
Itabos recovery rating of RR4 is constrained by the Dominican Republic recovery rating cap. The recovery analysis uses the average EBITDA reported by the company during the past five years as a starting point to estimate a stressed enterprise value. Fitch currently maintains a Positive Outlook for the Dominican sovereign and, as such, does not foresee a bankruptcy scenario for Itabo except for a low probability event, such as a severe fiscal crisis that would impact the companys cash flow to a point of liquidity constraint. As a result, Fitch has opted for estimating a distressed enterprise valuation to arrive at the recovery scenario on the following page. The distressed EBITDA is calculated to cover the companys fixed charges and critical maintenance capex, which is then adjusted by a conservative 5x multiple to arrive at a distressed company valuation. This distressed valuation would be associated with a severe fiscal crisis that would lead to a sustained cash flow drain for all generating companies in the country and contemplates the low probability event of a nonfriendly renegotiation scenario of the companys PPAs with distribution companies to the detriment of Itabo. In this hypothetical scenario it would be reasonable to expect a low demand for the companys assets under a competitive bidding process, further supporting the distressed valuation commented above.
Recovery Analysis Empresa Generadora de Electricidad Itabo S.A.

(USD Mil.) IDR: Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Distressed EBITDA Market Multiple (x) Enterprise Value B 39.0 46.7 21 5.0 104.0
Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Principal Amortization (Next 12 Months) Amount Outstanding and Available R/C 129.0
18 8
Distribution of Value by Priority Greater of Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Value Recovered 93.6 Recovery Rate (%) 73 Recovery Rating RR2
104.0 10.4 93.6
Unsecured Priority Issuer Default Rating Senior Unsecured
Notching +2
Rating B BB
Note: Numbers may not add due to rounding. Source: Fitch.
117
Corporates
Organizational Structure Empresa Generadora de Electricidad Itabo S.A.
Dominican Republic The AES Corporation IDR B+ 50.00% IDR B Through FONPER 50.00%a
Empresa Generadora de Electricidad Itabo S.A. Operating Company (Guarantor) IDR B
Itabo Dominicana (Issuer) USD116 Senior Unsecured Notes Rating B
aIncludes former CDE employees share of approximately 0.03%. Does not include intermediate holding companies. IDR Issuer default rating. Source: Fitch and Empresa Generadora de Electricidad Itabo S.A.
118
Corporates
Debt and Covenant Synopsis Empresa Generadora de Electricidad Itabo, S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) (x) Interest Coverage (Minimum) (x) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Limitation on Secured Debt Restricted Payments
Itabo Dominicana Empresa Generadora de Electricidad Itabo, S.A. (Itabo) Nov. 12, 2010 Nov. 12, 2020 Senior Unsecured Notes
3.5 2.5 Change-of-control clause at 101% of principal. Generally permits asset sales as long as it is divested at least equal to fair market value, it received at least 75% cash payment, and if the proceeds are used to reduce debt or are reinvested. The issuer is not allowed to incur additional debt. The guarantor is not allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. The guarantor can incur additional indebtedness in an aggregate principal amount not to exceed USD35 million. Itabo is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. The issuer is not permitted to pay any dividends or make any other distribution to its shareholders. The guarantor is not permitted to make any restricted payments if, among other clauses, it cannot incur additional debt according to its limitation on indebtedness, an event of default has occurred, or if such payment exceeds 100% of combined net income. None. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to, the interest reserve not being fully funded for more than five days and if the issuer, guarantor, or any restricted subsidiary defaults in any indebtedness of at least USD20.0 million. The issuer is allowed to redeem the notes in whole or in part at a preset redemption price.
Restriction on Purchase of Notes Source: Company and Fitch Ratings.
119
Corporates
Financial Summary Empresa Generadora de Electricidad Itabo, S.A.
(USD Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments. and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 3/31/12 39,140 39,140 15.3 15.3 9.6 (6.8) (1.0) 2.5 2.2 2.2 2.2 2.2 2.5 0.0 2.5 0.5 2.9 3.3 2.2 3.3 2.2 0.1 2011 27,050 27,050 10.9 10.9 9.9 (7.5) (1.8) 3.0 1.8 1.8 1.8 1.8 3.0 (0.2) 3.3 0.5 2.9 4.8 2.8 4.8 2.8 0.1 2010 (5,243) (5,243) (2.6) (2.6) 17.6 (3.1) (24.0) 4.5 (0.3) (0.3) (0.3) (0.3) 4.5 0.7 4.6 2.8 1.6 (24.5) (10.9) (24.5) (10.9) 0.3 2009 70,484 70,484 32.9 32.9 36.3 16.9 10.4 7.2 3.2 3.2 3.2 3.2 7.2 2.7 6.3 6.4 0.8 1.8 0.7 1.8 0.7 0.2 2008 73,461 73,461 29.2 29.2 1.3 (0.2) 14.1 0.3 4.2 4.2 4.2 4.2 0.3 1.0 2.2 0.9 21.9 1.7 1.4 1.7 1.4 0.1
579,941 44,436 128,852 128,852 128,852 0 128,852 337,475 466,327 26,853 (10,518) 16,335 0 (31,914) (1,725) (17,304) 2,105 330 0 0 (427) (15,296) 255,531 16,208 18,095 0 (3,193)
569,910 52,892 128,792 128,792 128,792 0 128,792 328,022 456,814 29,911 (15,952) 13,959 0 (30,702) (1,725) (18,468) 361 (56) 0 0 (427) (18,590) 247,619 24.1 4,111 15,112 0 (5,963)
573,293 71,482 128,564 128,564 128,564 0 128,564 335,688 464,252 63,480 (20,650) 42,830 0 (15,258) (33,775) (6,203) 226 1,986 (1,629) 0 (2,243) (7,863) 199,485 (6.9) (28,712) 18,217 0 (40,239)
503,710 79,150 125,000 125,000 125,000 0 125,000 305,389 430,389 134,635 (75,304) 59,331 0 (9,280) (13,790) 36,261 850 21,269 0 0 (16) 58,364 214,370 (14.9) 51,028 21,747 0 32,003
505,639 20,792 125,000 125,000 125,000 0 125,000 310,924 435,924 (11,905) 15,831 3,926 0 (4,410) 0 (484) 20,100 (3,453) 0 0 (20) 16,143 251,778 25.6 54,080 17,622 0 42,095
120
Corporates
Gol Linhas Aereas Inteligentes S.A.
Full Rating Report
Ratings
GOL Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating B+ B/RR5 B+ BBB(bra)
Key Rating Drivers

Liquidity Trend: At the end of June 2012, Gol Linhas Aereas Inteligentes S.A. (GOL) had BRL1.7 billion of cash and marketable securities, equivalent to 21% of the companys LTM June 2012 revenue. During LTM June 2012, GOLs FCF was negative BRL969 million. This figure is equivalent to about 57% and 19% of the companys cash position and on-balance debt, respectively, at the end of June 2012. Potential liquidity deterioration during the second quarter of 2012, driven by continued negative free cash flow (FCF) that resulted in lower cash balance or incremental debt, is GOLs main credit concern. High Financial Leverage: The companys net leverage, as measured by the total adjusted net debt/EBITDAR ratio, reached 13.2x by the end of June 2012. This represents a sharp increase versus the 8.9x and 4.6x levels reached by the end of December 2011 and June 2011, respectively. Market Position and Limited Diversification: GOL maintained an important market share in the Brazilian domestic market of 39.6% (including recently acquired Webjet S.A.), measured by revenue passenger kilometers (RPK), at the end of August 2012. The ratings consider the companys business model, which is primarily oriented to the domestic passenger market, and has limited product and geographic diversification. Capacity Management: Considering capacity from acquired Webjet S.A., GOL reached a total capacity of 32.5 billion, measured by available seat kilometers (ASK), during the January August 2012 period. GOLs management is likely to be conservative during the second half of 2012 in an effort to boost profitability and cash flow. This should result in 2012 growth rates for the companys capacity in the range of 2% to 4%, which is expected to be positive in terms of the companys yields. Macro and Business Environment: The ratings factor in the high degree of sensitivity of GOLs financial performance based on several factors not controlled by the company, such as competition, performance of the local currency, and fuel price trends. These factors should continue to put pressure on the companys margins in the short to medium term, which could offset the actions taken by management in terms of capacity management and ex-fuel cost reduction to improve its free cash flow generation during 2012. Subordination of Unsecured Debt Incorporated: The B/RR5 rating of the companys unsecured public debt reflects below-average recovery prospects in the event of a default due to the subordination of the unsecured debt to secured debt related to aircraft finance.
VRG Linhas Aereas S.A. (VRG) Foreign Currency Long-Term IDR B+ Local Currency Long-Term IDR National Long-Term Rating Senior Unsecured GOL Finance Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR B+ BBB(bra) BBB(bra)
B+ B/RR5
B+
IDR Issuer default rating.
Rating Outlooks
Long-Term Foreign Currency IDR Negative Long-Term Local Currency IDR Negative National Long-Term Rating Negative
Financial Data
Gol Linhas Aereas Inteligentes S.A. (Consolidated) (BRL Mil.) Revenue EBITDAR EBITDAR Margin (%) Cash Short-Term Debt Total On-Balance Debt Total Adjusted Debt Gross Adjusted Leverage (x) Net Adjusted Leverage (x) FCF FCF Margin (%) 6/30/12 8,074 569 7.0 1,703 606 5,233 9,196 16.2 13.2 (969) (12.0) 12/31/11 7,539 707 9.4 2,240 1,552 4,992 8,527 12.1 8.9 (1,324) (17.6)

Liquidity Trend Is Main Rating Driver: The Negative Outlook incorporates Fitchs concern regarding a potential scenario of continued negative trends in the companys FCF that could result in liquidity deterioration during the second half of 2012. A deterioration of the companys liquidity position would likely result in downgrades of the companys ratings. Conversely, better operational performance during 2012 could warrant a change in the Rating Outlook to Stable.
Analysts
Jos Vrtiz +1 212 908-0641 jose.vertiz@fitchratings.com Debora Jalles +55 21 4503-2629 debora.jalles@fitchratings.com
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Recovery Rating
GOLs unsecured public debt is rated B, one notch lower than the companys IDR, with a recovery rating of RR5 suggesting below-average recovery prospects under a default scenario. GOLs recovery ratings reflect Fitchs belief that the company will be reorganized rather than liquidated in a bankruptcy scenario, given Fitchs estimates that the companys going concern value is higher than its projected liquidation value due mostly to the value associated with GOLs market position in the Brazilian airline industry. In estimating the companys going concern value, Fitch applies a valuation multiple of 6.0x to the companys EBITDA post restructuring, which is estimated at BRL500 million annual basis and it would be reflecting the companys reduced size and capacity post restructuring. After reductions for administrative and cooperative claims, Fitch arrives at an adjusted reorganization value of approximately BRL3 billion. Based upon these assumptions, the total senior secured debt of BRL2.1 billion recovers 100%, resulting in RR1 ratings for this type of debt. The unsecured debt, BRL3.1 billion which includes the senior notes, local debentures, and perpetual bonds recovers approximately 18% resulting in a recovery rating of RR5, reflecting the subordination of the unsecured debt to the secured debt.
Recovery Analysis GOL Linhas Aereas Inteligentes S.A. (GOL)

(BRL Mil., As of June 30, 2012) Going Concern Enterprise Value EBITDA LTM June 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Secured Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Lien 2,127 Value Recovered Recovery (%) 2,127 100
N.A. 500 6 3,000
400 75 475
3,000 300 2,700
2,700 2,127 573 0 573 Value Recovered Recovery (%) 573 18 Concession Allocation Recovery Rating RR5
Unsecured Priority Senior Unsecured N.A. Not applicable. Source: Fitch Ratings.
Lien 3106
Notching (1)
Rating B
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Organizational Structure Gol Linhas Aereas Inteligentes S.A. (GOL)
(As of June 30, 2012)
Fund de Investimento de Participacoes Volluto (Oliveira Family) 62.47%
Free Float
Others
27.29%
9.97%
Gol Linhas Aereas Inteligentes S.A. (GOL)
100.00%
100.00%
100.00%
VRG Linhas Aereas S.A. (VRG)
Gol Finance Cayman
GAC Inc.
100.00% Webjet Linhas Aereas S.A. (Webjet)
100.00% Sky Finance
Source: GOL.
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Debt and Covenant Synopsis Gol Linhas Aereas Inteligentes S.A. and Subsidiaries
International Issuances (Foreign Currency Notes) Issuer GOL Finance Guarantors GOL Linhas Areas Inteligentes S.A. and GOL Transportes Areos S.A. International Issuance #1: Issue Date Maturity Date Description of Debt Amount International Issuance #2: Issue Date Maturity Date Description of Debt Amount International Issuance #3: Issue Date Maturity Date Description of Debt Amount Main Characteristics Ranking April 5, 2006 N.A. Senior Unsecured Guaranteed Perpetual Notes USD200 Mil.
March 22, 2007 April 3, 2017 Senior Unsecured Guaranteed Notes USD225 Mil.
July 20, 2010 July 20, 2020 Senior Unsecured Guaranteed Notes USD300 Mil. The following is a summary of the main characteristics included in the indentures governing the above-indicated international. The notes will be unsecured and will rank equally with the other unsecured unsubordinated indebtedness the Issuer may incur. Gol Linhas Areas Inteligentes S.A. and Gol Transportes Areos S.A., the guarantors will unconditionally guarantee, jointly and severally, on a senior unsecured basis, all of the Issuers obligations pursuant to the notes. The guarantees will rank equally in right of payment with the other unsecured unsubordinated indebtedness and guarantees of the guarantors. The notes will be effectively junior to the issuers and the guarantors secured indebtedness. No Yes No Yes No Yes No Yes
Covenant Summary Negative Pledge Change of Control Limit of Indebtedness Cross Default Debt Service Coverage Ratio Merger Restriction Limit on Subsidiary Debt Certain Sales of Assets
N.A. Not applicable. Source: Gol Linhas Aereas Inteligentes S.A.
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Debt and Covenant Synopsis Gol Linhas Aereas Inteligentes S.A. and Subsidiaries
Local Debentures Issuer Guarantors Local Issuance #1 Issue Date Maturity Date Description of Debt Collateral Amount Local Issuance #2 Issue Date Maturity Date Description of Debt Collateral Amount Other Loans and Financings BNDES Loan IFC Loan Covenants Status (Debentures, Loans and Financings)
VRG Linhas Areas GOL Linhas Areas Inteligentes S.A.
May 13, 2009 Sept. 13, 2015 4th Issue of Simple, Nonconvertible Debentures Unsecured Debt N.A. BRL 600 Mil.
June 20, 2011 June 10, 2017 5th Issue of Simple, Nonconvertible Debentures Unsecured Debt N.A. BRL 500 Mil.
Restrictive Covenants Net Financial Debt / EBITDAR In Compliance (Jun 2012) Waiver Current Assets / Current Liabilities In Compliance (Jun 2012) Waiver Debt Coverage Ratio. In Compliance (Jun 2012) Waiver EBITDA/Debt Service In Compliance (Jun 2012) Waiver N.A. Not applicable. Source: Gol Linhas Aereas Inteligentes S.A.
BRL15.5 Mil. outstanding as of June 30, 2012 BRL25.6 Mil. outstanding as of June 2012 The following information has been extracted from the notes in the companys financial statements. VRG has restrictive covenants (covenants) in its financing agreements with the following financial institutions: IFC, Bradesco and Banco do Brasil (Debentures IV and V, respectively). The restrictive covenants measures for these loans are: (1) net financial debt/ EBITDAR, (2) current assets/current liabilities, (3) EBITDA/debt service, and (4) debt coverage ratio. On Dec. 31, 2011, the company and its subsidiaries did not reach the minimum standards established for the financing from the IFC, BNDES and the debentures IV and V, bond to EBITDA due to accumulated losses in the year ended Dec. 31, 2011. VRG issued to BNDES a letter of guarantee of BRL15.5 million, whose amount exceeds the current debt, and is not therefore subject to liquidity problems in case it is required to settle such debts. The following is a summary of the main restrictive covenants that apply for the VRG debentures (4th and 5th) and the BNDES and IFC loans above-indicated. Level as of June 30, 2012: 13x No Yes, until December 2012 Level as of June 30, 2012: 1.0x No Yes, until December 2012 Level as of June 30, 2012: 0.95x No Yes, until December 2012 Level as of June 30, 2012: 0.95x No Yes, until December 2012
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Financial Summary GOL Linhas Aereas Inteligentes S.A.
(BRL 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. 2008 36,479 681,568 0.6 10.6 5.9 (4.0) (72.0) 0.15 0.77 0.03 0.37 0.60 0.01 0.36 0.47 14.97 93.38 82.00 11.62 11.01 8.05 0.28 7,258,578 414,915 967,452 2,438,881 3,406,333 3,406,333 4,515,623 7,921,956 1,071,608 8,993,564 (358,041) 524,901 166,860 (356,863) (36,258) (226,261) 397,513 (533,863) (41,180) (403,791) 6,406,193 29.7 (88,648) 242,099 645,089 (1,239,347) 2009 556,145 1,206,828 9.2 20.0 14.1 4.9 48.4 2.79 1.93 1.29 0.63 0.79 1.55 0.66 2.28 2.82 5.29 5.63 3.08 6.37 5.19 8.81 0.19 8,720,120 1,422,852 591,695 2,542,167 3,133,862 3,133,862 4,554,781 7,688,643 2,609,986 10,298,629 514,799 (57,541) 457,258 (161,906) 295,352 167,328 (42,416) 811,654 (18,841) 1,213,077 6,025,382 (6.0) 413,292 288,112 650,683 890,832 2010 979,399 1,535,061 14.0 22.0 17.2 (2.0) 7.7 3.36 2.60 1.65 1.36 1.20 1.95 0.35 3.08 1.09 4.19 3.82 1.80 4.97 3.68 10.96 0.09 9,063,847 1,978,464 346,008 3,395,080 3,741,088 3,741,088 3,889,634 7,630,722 2,929,169 10,559,891 887,883 (163,986) 723,897 (664,229) (185,839) (126,171) (48,990) 638,638 120,861 (10,888) 573,450 6,979,447 15.8 697,795 376,743 555,662 214,197 2011 202,000 707,058 2.7 9.4 9.0 (18.0) (29.0) 0.90 0.40 0.70 0.10 0.28 0.95 0.69 (1.00) 8.84 24.71 13.62 12.06 8.89 11.66 0.31 10,655,141 2,239,574 1,552,440 3,439,008 4,991,448 4,991,448 3,535,406 8,526,854 2,205,911 10,732,765 (49,226) (553,294) (602,520) (670,880) (50,866) (1,324,266) (114,748) (74,594) 628,187 845 159,005 (725,571) 7,539,308 8.0 (244,504) 509,286 505,058 (751,538) LTM Ended 6/30/12 2,555 568,723 0.0 7.0 10.7 (12.0) (58.0) 1.03 0.51 0.33 1.02 1.11 8.06 2,048.11 1,381.70 16.17 13.18 11.98 0.41 0.12 10,454,125 1,702,666 605,678 4,627,238 5,232,916 5,232,916 3,963,176 9,196,092 1,468,008 10,664,100 18,718 (228,560) (209,842) (759,269) (9) (969,120) (114,748) 193,576 71,151 38 158,824 (660,279) 8,073,971 14.3 (399,583) 555,416 566,168 (1,181,247)
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Grupo FAMSA S.A.B. de C.V.
B+ B+ B+
Ratings
Foreign Currency Long-Term IDR Senior Unsecured due 2015 Local Currency Long-Term IDR
National Long-Term Rating BBB(mex) Short-Term Rating F3(mex) MXN 1 Billion Cebures due 2014 BBB(mex) MXN1 Billion Short-Term Cebures Program F3(mex)
Declining U.S. Performance Forces Closures: Driven by poorly performing West Coast stores, Grupo FAMSA S.A.B. de C.V.s (Famsa) same-store sales (SSS) of U.S. operations has declined since 2008, notching double-digit decreases in the last two years, resulting in negative EBITDA of MXN202 million for 2011. Management plans to wind down all West Coast operations by the end of 2012. This will likely improve leverage levels by increasing EBITDA and/or reducing indebtedness. Low SSS Constrains Revenues: SSS of Mexican operations (including financial revenues) underperformed that of Famsas ANTAD (National Retailers Association of Mexico) peers over the last few quarters. As of second-quarter 2012, on a LTM basis, consolidated revenues decreased 5.7%, while EBITDA grew 4.4%. Retail Strengths and Banking Subsidiary Support Ratings: Famsas ratings reflect its retail operation strengths, including market position in Mexico, geographic and product diversity, and broadly stable operating cash flow. Famsas sales benefit from financing provided by its banking subsidiary, Banco Ahorro Famsa (BAF, or the Bank), which is rated BBB(mex) by Fitch Ratings. BAFs Asset Quality Remains Weak: The quality of BAFs loan portfolio, which is mainly composed of consumer loans (73.5% of total assets), has deteriorated as borrowers payment capacity has suffered from adverse economic conditions. Asset quality remains weak despite ample past due loans coverage ratios (143.7% in 2011). The banks commercial loan portfolio, which is highly concentrated, grew 22.7% in 2011. Leverage Is High: LTM consolidated total debt-to-EBITDA and adjusted debt-to-EBITDAR ratios (excluding bank deposits) have stayed broadly stable at 3.0x and 4.2x, respectively. Including bank deposit leverage, these ratios are high at 8.9x and 8.3x, respectively.
Rating Outlooks
Financial Data
Grupo Famsa, S.A.B. de C.V. (MXN Mil.) Revenue EBITDA Total Debt Gross Interest Expense Debt/EBITDA (x) EBITDA/ Gross Interest Expense (x) 6/30/12 14,518 1,932 17,176 1,268 8.9 1.5 2011 15,295 1,698 16,252 1,213 9.6 1.4

Improved Sales: Going forward, Fitch would favorably view an increase in SSS, an improved mix of sales, or an upgrade of BAF. Decreases in EBITDA: Conversely, Fitch would unfavorably view a decrease in EBITDA generation by Famsas retail operation, failure to deleverage after FAMSA USAs downsizing, or an increase in short-term debt as a percentage of total (nondepositary) debt.

Analysts
Miguel Guzmn Betancourt +52 81 8399-9100 miguel.guzman@fitchratings.com Indalecio Riojas +52 81 8399-9100 indalecio.riojas@fitchratings.com
Wieldy Short-Term Debt: Short-term debt as of June 30, 2012 was about MXN2.1 billion (excluding BAFs customer deposits), a manageable figure when taking into account the companys cash flow generation, cash holdings of about MXN1.8 billion (approximately MXN1.4 billion outside of BAF, a regulated banking entity), and track record of successfully refinancing short-term debt. The company has not issued dividends over last few years and projects about MXN350 million of capex for 2012.
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Recovery Rating
After considering potential going concern and liquidation scenarios, Fitch used a liquidation valuation for recovery calculations because it would represent the most value to debt holders (as a result of accounts receivables being mostly financed by BAF, and thus, benefitting from IPABs bank deposit insurance). Since BAFs customer deposits have seniority over other institutional debt as per regulations, remaining debt (senior notes and bank debt) was rated RR4 due to a 34% recovery estimate.
Recovery Analysis Grupo Famsa, S.A.B. de C.V.

(USD Mil.) IDR: B+ Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 11,397.7 0.0 Value Recovered 11,397.7 Recovery (%) 100 Recovery Rating RR3 Notching +1 Rating BB Advance Available to Rate (%) Creditors 0 75 12,870.7 40 769.3 50 1,180.8 14,820.8 1,837.8 17,161.0 1,923.1 2,361.6 23,283.5
1,268.1
1,268.1
14,820.8 1,482.1 13,338.7
13,338.7 11,397.7 1,941.0 97.0 1,843.9 Value Recovered 1,941.0 Recovery (%) 34 Concession Allocation (%) 100 Recovery Rating RR4
Lien 5,778.6
Notching 0
Rating B+
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Organizational Structure Grupo Famsa S.A.B. de C.V.
(MXN Mil., As of 2Q12)
Grupo Famsa, S.A.B. de C.V. Senior Notes due 2015 Cebures Issues Other Issuances Bank Debt 99.99% Famsa USA Deutche Bank 53.6 Bank Deposits Bank Debt 11,398 58 2,682 2,000 536 449 100.00% Banco Ahorro Famsa
Source: Grupo Famsa S.A.B. de C.V.
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Debt and Covenant Synopsis Grupo Famsa, S.A.B. de C.V.
(Foreign Currency Notes) Overview Issuer Grupo Famsa, S.A.B. de C.V. Guarantors All major subsidiaries except Banco Ahorro FAMSA, S.A. de C.V. Document Date July 20, 2010 Maturity Date July 20, 2015 Description of Debt USD200 million aggregate principal amount of 11% senior notes. Acquisitions/Divestitures Change-of-Control If a change of control occurs, each holder of notes may require the issuer to repurchase all or a portion of its notes at a purchase price equal to Provision 101.0% of the principal amount, plus accrued and unpaid interest through the date of purchase. Limitation on Assets Under the terms of the indenture, Famsa and its restricted subsidiaries will not realize an asset sale unless: Sale 1. Famsa or the applicable restricted subsidiary receives consideration at the time of the asset sale at least equal to the fair market value of the assets sold; and 2. At least 75% of the consideration received for the assets sold by Famsa or the restricted subsidiary, in the asset sale shall be in the form of cash received at the time of the sale. Notwithstanding, Famsa shall not consummate an asset sale with respect to the capital stock or assets of a bank regulated subsidiary. A disposition of accounts receivable is not considered an asset sale. Limitation on Famsa will not incur any indebtedness, except if the consolidated leverage ratio is not greater than (1) 3.5 to 1.0, if such incurrence occurs prior Indebtedness to May 1, 2013, or (2) 3.25 to 1.0, if such incurrence occurs on or after May 1, 2013. Notwithstanding the paragraph above, Famsa and its restricted subsidiaries, as applicable, may incur the following indebtedness: 1. Indebtedness in respect of the notes (including any note guarantee in respect thereof) excluding additional notes; 2. Guarantees by Famsa or any subsidiary guarantor of indebtedness of Famsa; provided that, if any such guarantee is of subordinated indebtedness, then the note guarantee of such subsidiary guarantor shall be senior to such subsidiary guarantors guarantee; and 3. Indebtedness incurred by Famsa or any subsidiary guarantor under the credit facilities an aggregate principal amount outstanding at any one time not to exceed the greater of (x). Limitation on Famsa will not permit any restricted subsidiary that is not a subsidiary guarantor to guarantee any indebtedness of the company, unless an Guarantees effective provision is made to secure the notes, on an equal and ratable basis with such guarantee or lien. Limitation on Restricted Famsa and its restricted subsidiaries will not make restricted payments if: Payments 1. A default shall have occurred and be continuing; 2. Famsa is not able to incur at least USD1.00 of additional indebtedness. 3. The aggregate amount of the proposed restricted payments exceeds the sum of: a. 50% of Famsas cumulative consolidated net income plus b. 100% of the aggregate net cash proceeds received by Famsa from any: i. Contribution to equity capital not representing an interest in disqualified capital stock or issuance and sale of qualified capital stock of Famsa, in each case, subsequent to the issue date, or ii. Issuance and sale subsequent to the issue of any indebtedness of Famsa or any restricted subsidiary that has been converted into or exchanged for qualified capital stock of Famsa. Limitation on Merger, Upon any merger or any transfer of assets of Famsa and its restricted subsidiaries in accordance with this covenant, in which Famsa is not the Consolidation, and Sale continuing corporation, the surviving entity formed by such consolidation, will succeed Famsa under the indenture and the notes with the same of Assets effect as if such surviving entity had been named as such. Limitation on Famsa and its restricted subsidiaries will not enter into any transaction or series of related transactions (including, without limitation, the Transactions with (purchase, sale, lease, etc.), unless: Affiliates. 1. The terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arms-length basis from a person that is not a Famsa affiliate; 2. In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD15.0 million, the terms of such affiliate transaction will be approved by a majority of the members of Famsas board of directors. 3. In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD25.0 million, Famsa will obtain a favorable opinion as to the fairness of such affiliate transaction to the company and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. Source: Issuer.
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Corporates
Financial Summary Grupo Famsa, S.A.B. de C.V.
(MXN 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 1,931,665 2,759,783 0.1 0.2 0.1 (0.1) 0.1 2.5 1.5 1.3 0.1 0.2 1.9 (0.0) 0.1 (10.6) 5.7 8.9 7.9 8.3 7.7 0.1 0.8 28,021,785 1,837,782 13,483,198 3,693,086 17,176,284 17,176,284 5,796,826 22,973,110 8,566,524 31,539,634 1,908,138 (3,614,471) (1,706,333) (160,894) (1,867,227) 38,895 2,014 593,468 1,672,706 439,856 14,518,433 (6) 1,559,880 1,268,103 828,118 447,005 2011 1,697,602 2,589,378 0.1 0.2 0.1 (0.1) 0.0 2.7 1.4 1.2 0.1 0.2 2.0 (0.1) 0.0 (5.8) 5.4 9.6 8.7 8.7 8.1 0.1 0.8 28,293,707 1,451,355 12,449,563 3,802,680 16,252,243 16,252,243 6,242,432 22,494,675 9,202,749 31,697,424 2,089,020 (3,808,310) (1,719,290) (294,653) (2,013,943) 5,081 1,376 815,606 1,528,776 336,896 15,294,907 2 1,292,299 1,213,079 891,776 105,501 2010 1,701,666 2,595,699 0.1 0.2 0.1 (0.2) 0.1 1.5 1.6 1.3 0.1 0.2 1.3 (0.2) (0.1) (14.3) 7.9 8.0 7.3 7.6 7.2 0.1 0.8 25,668,055 1,114,459 11,101,913 2,486,348 13,588,261 13,588,261 6,258,231 19,846,492 8,986,100 28,832,592 539,230 (3,349,890) (2,810,660) (196,466) (3,007,126) 5,000 2,410,499 (591,627) 14,992,877 0 1,306,870 1,088,829 894,033 705,624 2009 1,554,429 2,475,328 0.1 0.2 0.1 (0.1) 0.0 1.6 1.4 1.2 0.1 0.2 1.3 (0.1) 0.1 (6.8) 6.5 7.3 6.2 7.2 6.5 0.1 0.9 22,604,443 1,706,086 10,266,716 1,009,640 11,276,356 11,276,356 6,446,293 17,722,649 8,367,366 26,090,015 667,170 (2,580,349) (1,913,179) (280,742) (2,193,921) 11,234 1,236,705 1,203,533 257,551 14,946,922 1 1,123,162 1,125,446 920,899 97,355 2008 1,456,029 2,261,029 0.1 0.2 0.2 (0.2) 0.1 3.5 1.7 1.3 0.1 0.2 2.3 (0.1) 0.0 (2.3) 4.1 6.9 5.9 6.9 6.3 0.1 1.0 21,007,574 1,448,535 10,054,377 10,054,377 10,054,377 5,635,000 15,689,377 7,294,969 22,984,346 2,149,876 (3,738,293) (1,588,417) (700,682) (2,289,099) 12,485 272,657 2,858,299 854,342 14,762,221 4 1,036,640 871,166 805,000 560,865
131
Corporates
Grupo Posadas S.A.B. de C.V.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Notes due 2015 Local Currency Long-Term IDR National Long-Term Rating MXN2.25 billion Cebures due 2013 IDR Issuer default rating. B B+/RR3 B BB+(mex) BB+(mex)
Key Rating Drivers

High Leverage: Grupo Posadas, S.A. de C.V. (Posadas) had a total adjusted debt-toEBITDAR ratio of 6.5x as of June 30, 2012 on a LTM basis, a slight increase from 6.0x during the previous 12-month period. The companys high leverage reflects a weakening trend, a result of the depreciation of the Mexican peso (MXN) against the U.S. dollar (USD) and adverse economic conditions in Mexico. Negative Free Cash Flow: Posadas had been able to adjust and adapt its operations during previous economic downturns, but the current economic environment, coupled with security concerns, has challenged the company. Funds from operations and operating cash flow have trended downward since 2008 and free cash flow after dividends and capex has been negative since 2010. High Correlation to Economic Cycles: The ratings of Posadas consider the industrys high correlation to economic cycles, which negatively affects operating trends in downturns and increases volatility of operating results. The use of multiple hotel formats allows the company to target domestic and international business travelers of different income levels in addition to tourists, thus diversifying its revenue base. Geographic diversification is limited, however, as Posadas operations are primarily located in Mexico. Recent Improvements in RevPAR: The company has been able to improve its operations in the second quarter of 2012 versus the same quarter last year, mainly due to improved revenue per available room (RevPAR) in urban and coastal properties, a consequence of high occupation levels. Increased RevPAR has compensated for soft cash flow in the vacation club segment. While average daily rates (ADRs) for urban locations have remained broadly flat, ADRs for coastal locations continue to be under pressure.
Rating Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR National Long-Term Rating Stable Stable Stable
Financial Data
Grupo Posadas, S.A.B. de C.V. (MXN Mil.) Revenue EBITDA Total Debt Gross Interest Expense Debt/EBITDA (x) EBITDA/ Gross Interest Expense (x) LTM 6/30/12 7,867 968 6,055 515 6.3 1.9 2011 7,296 947 6,329 481 6.7 2.0

Analysts
Miguel Guzmn Betancourt +52 81 8399-9100 miguel.guzman@fitchratings.com Sergio Rodriguez, CFA +52 81 8399-9100 sergio.rodriguez@fitchratings.com
Decreased Leverage: An inability to refinance the 2013 maturity in advance is considered a significant credit risk for the issuer. Any nonrecurring cash infusion, which diminishes debt and assuages liquidity concerns, would be considered beneficial for Posadas creditworthiness. Deterioration of Operating Trends: Fitch would negatively view any weakening of operating trends or decreases in RevPAR that could lead to lower EBITDA and cash flow levels.
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Corporates
Recovery Rating
Both a going concern scenario and a liquidation scenario were considered. In deriving a distressed going concern valuation, Fitch only slightly discounted the companys LTM EBITDA, as it is already low by historical standards. We also took into account the potential loss of 19% of it EBITDA due to the divestiture of the South American operations and then applied a 4.6x distressed EBITDA multiple. This multiple is at the low end of transactions seen in the industry. In estimating a liquidation valuation, we discounted accounts receivable heavily, as they mostly represent time share contracts that could prove to be, for the most part, uncollectable in a scenario in which the company ceases to exist. Since bank debt has seniority, due to collateral, the remaining debt (senior notes and local Cebures issuance) was rated RR4, due to its 38% recovery estimate.
Recovery Analysis Grupo Posadas S.A.B. de C.V.

(MXN Mil.) Available to Creditors 1,247.3 25.0 2,133.6 2,816.3 Going Concern Enterprise Value Sept. 30, 2012 LTM EBITDA (Pro Forma) Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Adminstrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate (%) 0 80 50 20
1,056.0 27 772.4 7.4 5,715.8 340.9 288.7 142.9 772.4 5,715.8 571.576 772.4
791.9 1,559.1 50.1 7,719.6
5,144.2 899.5 4,244.7 212.2 4,032.4
Distribution of Value Value Concession Recovered Recovery (%) Allocation (%) 3,405.3 100 100 Recovery Rating RR3
Lien 3,405.3
Notching +1
Rating B+
Note: Numbers may not add due to rounding. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Fitch Ratings.
133
Corporates
Organizational Structure Grupo Posadas S.A.B. de C.V. (As of 2Q12)
Grupo Posadas, S.A.B. de C.V. Certificados Bursatiles Due 2013 MXN2,250 Mil. Senior Notes 2015 MXN2,676 Mil.
100% Promocin de Inversiones Hoteleras, S.A. de C.V. Scotiabank MXN285 Mil.
100% Posadas do Brasil Bradesco MXN99 Mil.
100% Compaia Hotelera Los Cabos, S.A. de C.V. Bancomext MXN359 Mil.
100% Fiesta Americana Vacation Credit Banorte MXN386 Mil.
Source: Grupo Posadas S.A.B. de C.V.
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Corporates
Debt and Covenant Synopsis Grupo Posadas, S.A.B. de C.V.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Leverage (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Grupo Posadas, S.A.B. de C.V. All major subsidiaries except Fondo Inmobiliario Posadas, S.A. de C.V. Feb. 5, 2010 Jan. 15, 2015 USD200 million aggregate principal amount of 9.250% senior notes. N.A. N.A.
If Posadas experiences a change of control, holders of the notes may require them to repurchase all or part of the notes at 101% of their principal amount, plus accrued and unpaid interest and any additional amounts until the redemption date. Limitation on Assets Sale Under the terms of the indenture, Posadas will not, and will not permit any restricted subsidiary to consummate any asset sale, unless: 1) The consideration received by Posadas or such restricted subsidiary is at least equal to the fair market value of the assets sold or disposed of as determined in good faith by Posadas board of directors (including as to the value of all noncash consideration); 2) Except in the case of any sale of time share, full or fractional ownership or membership interests in the ordinary course of the vacation club business, at least 75% of the consideration received by Posadas or such restricted subsidiary, as the case may be, from such asset sale shall be in the form of cash or temporary cash investments and is received at the time of such disposition; 3) An amount equal to 100% of the net cash proceeds from such asset sale is either applied to a) the repayment of indebtedness of the issuer or any restricted subsidiary, which is secured by a permitted lien (with a corresponding reduction in the commitment with respect thereto) or b) the investment in or acquisition of assets related to a permitted business, in each case, within 365 days from the later of the date of such asset sale or the receipt of the net cash proceeds. Limitation on Indebtedness 1) Under the terms of the indenture, Posadas will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, incur anyindebtedness provided, however, that Posadas may incur indebtedness and any restricted subsidiary may incur indebtedness if on the date of the incurrence of such indebtedness, the consolidated interest coverage ratio would be greater than 2.5 to 1.0. 2) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of indebtedness, the U.S. dollar-equivalent principal amount of indebtedness denominated in a non-U.S. currency will be calculated based on the relevant currency exchange rate in effect on the date such indebtedness was incurred or, in the case of revolving credit indebtedness, first committed; provided that if such indebtedness is incurred to refinance other indebtedness denominated in a non-U.S. currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such refinancing indebtedness does not exceed the principal amount of such indebtedness being refinanced. 3) For purposes of determining any particular amount of indebtedness: a) guarantees, liens, or obligations with respect to letters of credit supporting indebtedness otherwise included in the determination of such particular amount shall not be included and b) any liens granted pursuant to the equal and ratable provisions of the indenture shall not be treated as indebtedness. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the types of indebtedness described herein, Posadas, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness. Limitation on Restricted Posadas will not, and will not cause or permit any of the restricted subsidiaries to, directly or indirectly: Payments 1) Declare or pay any dividend or make any distribution other than a) dividends or distributions payable in qualified capital sock of Posadas and b) in the case of restricted subsidiaries, dividends, or distributions to Posadas or any other restricted subsidiary and pro rata dividends or distributions payable to the other holders of the same class of capital stock of such restricted subsidiary on or in respect of shares of its capital stock to holders of such capital stock; 2) Purchase, redeem, or otherwise acquire or retire for value any capital stock of Posadas or acquire shares of any class of such capital stock other than capital stock owned by Posadas or any wholly owned restricted subsidiary (other than in exchange for its capital stock) which is not disqualified stock; 3) Make any principal payment on, purchase, redeem, prepay, decrease, or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment (other than the purchase, redemption, prepayment, or other acquisition of any such subordinated indebtedness in anticipation of any such sinking fund obligation, principal installment or final maturity, in each case, due within one year of such purchase, redemption, prepayment, or other acquisition), any indebtedness that is subordinate or junior in right of payment to the notes or the guarantees; or 4) Make any investment (other than permitted investments), if at the time of such restricted payment or immediately after giving effect thereto a default or an event of default shall have occurred and be continuing. N.A. Not applicable. Continued on the next page. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
135
Corporates
Debt and Covenant Synopsis Grupo Posadas, S.A.B. de C.V. (Continued)
(Foreign Currency Notes) Acceleration If an event of default occurs and is continuing under the indenture, either the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding, by written notice to Posadas (and to the trustee if such notice is given by the holders), may, and the trustee at the request of such holders shall, declare the principal of, and accrued interest (together with any additional amounts) on the notes to be immediately due and payable. Upon such a declaration of acceleration, such principal and accrued interest shall be immediately due and payable. Posadas will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service) with, or for the benefit of, any affiliate of posadas (each an Affiliate Transaction), other than: 1) Affiliate transactions permitted; and 2) Certain affiliate transactions meeting the following requirements: a) b) The terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arms-length basis from a person that is not an affiliate of Posadas; In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD5.0 million (or the equivalent in other currencies), the terms of such affiliate transaction shall be approved by a majority of the members of the board of directors of Posadas or such restricted subsidiary, as the case may be, such approval to be evidenced by a board resolution stating that such members of the board of directors have determined that such transaction complies with clause (a) immediately above; In the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD15.0 million (or the equivalent in other currencies), the terms of such Affiliate Transaction will be set forth in an Officers Certificate delivered to the trustee stating that such transaction complies with clauses (a) and (b) immediately above; and d) in the event that such Affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD20.0 million (or the equivalent in other currencies), the issuer will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to the issuer and any such restricted subsidiary, if any, from a financial point of view from an independent financial advisor and file the same with Trustee.
Limitation on Transactions with Affiliates
c)
Limits on Consolidations or Mergers
Optional Redemption
Posadas will not: 1) In one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease, or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other person or 2) Permit any guarantor to, in one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease, or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other person in each case. They may redeem the notes, in whole or in part, at a redemption price based on a make-whole premium. Prior to Jan. 15, 2013, they may redeem up to 35% of the aggregate principal amount of the notes with the proceeds from certain qualified equity offerings.
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Corporates
Financial Summary Grupo Posadas, S.A.B. de C.V.
(MXN Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 968 1,357 12.3 17.2 6.4 (4.4) (10.4) 1.2 1.9 1.5 0.3 0.4 1.1 0.1 0.2 (3.7) 8.8 6.3 5.8 6.5 6.1 8.7 0.4 16,455 473 2,645 3,410 6,055 6,055 2,723 8,778 6,818 15,596 97 (363) (266) (71) (12) (578) (36) 192 (774) 889 1 196) 7,867 13.8 542 515 389 (573) 2011 947 1,324 13.0 18.1 8.3 (3.9) (16.9) 1.5 2.0 1.5 0.9 0.9 1.3 0.2 0.6 (1.4) 8.8 6.7 6.2 7.5 7.1 7.9 0.1 12,695 422 554 5,775 6,329 6,329 3,549 9,878 3,615 13,493 261 (418) (157) (116) (12) (285) (36) 116 (11) 42 18 (156) 7,296 11.7 546 481 377 (616) 2010 1,022 1,382 15.6 21.2 9.4 (2.8) 1.0 1.9 2.3 1.7 1.5 1.4 1.5 0.4 1.3 1.2 7.6 5.7 5.1 6.8 6.4 8.4 0.0 13,334 575 211 5,609 5,820 5,820 3,595 9,415 3,670 13,085 422 (134) 288 (238) (232) (182) (351) 1,018 (611) (126) 6,531 (7.8) 590 452 360 40 2009 1,243 1,621 17.5 22.9 11.2 9.8 5.9 3.1 3.3 2.2 0.9 1.0 2.0 0.8 1.3 6.1 5.9 4.0 3.5 5.5 5.1 7.3 0.2 13,261 658 940 4,018 4,958 4,958 4,013 8,971 4,586 13,557 769 84 853 (139) (23) 691 (443) (10) (1) (410) (173) 7,083 2.9 806 375 378 267 2008 1,531 1,864 22.2 27.1 18.1 20.3 (12.8) 5.0 3.6 2.5 1.0 1.0 3.2 1.2 1.8 4.6 3.7 3.5 3.0 4.8 4.4 8.7 0.2 13,652 831 1,057 4,307 5,364 5,364 3,662 9,026 4,398 13,424 1,681 325 2,006 (433) (174) 1,399 (547) 42 (444) 450 6,884 15.2 1,125 420 333 (622)
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Corporates
Grupo Senda Autotransportes, S.A. de C.V. (Grupo Senda)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Secured Local Currency Long-Term IDR IDR Issuer default rating. B B/RR4 B
Key Rating Drivers

Liquidity is Main Credit Concern: Grupo Senda Autotransportes, S.A. de C.V. (Grupo Senda) has limited financial flexibility due to a weak liquidity position. The company remains dependent upon its creditors to roll over short-term debt due to its weak cash position. As of June 30, 2012, the company had MXN102 million of cash and marketable securities and MXN417 million of short-term debt. During the LTM ended in June, the company generated MXN302 million of cash flow from operations. Market Position and Operational Risks Incorporated: The company maintains a strong market position in Mexicos highly competitive and fragmented intercity bus transportation industry. Grupo Senda is exposed to industry-related risks such as seasonal fluctuations in passengers, cyclicality risk affecting the personnel segment, and volatile fuel costs. Rising concerns about security in Mexico is also an issue that negatively affects the tourism and transportation industries. Foreign Exchange Risk a Constraint: Grupo Senda is exposed to foreign exchange risk as about 90% of its revenues are in Mexican pesos and approximately 75% of its debt is denominated in U.S. dollars. 2012 Expectations: Fitch expects the company to close 2012 with an EBITDA margin of around 23%. The companys gross leverage is expected to remain stable at around 3.0x and free cash flow (FCF) generation is anticipated to be neutral during 2012, as Grupo Senda should implement its capex plan without increasing current debt levels. Liquidity is expected to remain fragile with significant levels of debt payments scheduled for the next 24 months relative to its cash position. As of June 30, 2012, Group Senda had MXN2,951 million of debt. It generated MXN 898 million of EBITDA during the LTM ended in June.
Rating Outlooks
Financial Data
Grupo Senda (MXN Mil.) Revenues EBITDA EBITDA Margin % CFFO Capex FCF FCF Margin % Cash Short-Term Debt Total Debt EBITDA/ Total Debt (x) FCF Debt Service Coverage (x) Cash as % of Revenues Cash/Revenues (Days) 6/30/12 3,785 898 23.7 302 214 88 2.3 102 417 2,951 3.3 0.6 2.7 10 12/31/11 3,665 765 22.2 307 346 (40) (1.1) 169 496 3,149 3.9 0.4 4.6 17

Key Rating Drivers: The Stable Outlook reflects the view that the wave of violence affecting several Mexican states will not interrupt the stable trend in the companys operating results in the short and medium term. A negative rating action could be triggered by a combination of the following: deterioration of the companys credit protection measures due to sizeable negative FCF driven by poor operational results and/or unexpected capex levels funded with short-term debt. Expectations by Fitch of total adjusted debt to EBITDA consistently at 4.5x would likely result in a downgrade. Increasing competition followed by the return to discounted-price practices as a key component of the companys business strategy to gain market share could also lead to a negative rating action. Conversely, Fitch believes a combination of the following could trigger a positive rating action: improvement in cash flow generation and significantly lower leverage. A permanent improvement in the companys liquidity position would also be viewed positively.
Analysts
Jose Vertiz +1 212 908-0641 jose.vertiz@fitchratings.com Miguel Guzman +011 5281 8399-9100 miguel.guzman@fitchratings.com
138
Corporates
Recovery Rating
Grupo Sendas recovery ratings reflect Fitchs belief that the company would be reorganized rather than liquidated in a bankruptcy scenario. In estimating a going-concern value, Fitch applies a valuation multiple of 3.5x to the companys discounted EBITDA. Fitch also discounts Grupo Sendas normalized operating EBITDAR by approximately 50%, which reflects the sensitivity of the companys cash flow generation in a distressed scenario as evidenced during the first half of 2009. After reductions for administrative and cooperative claims, Fitch arrives at an adjusted reorganization value of approximately MXN1.4 billion. Based upon these assumptions, the total senior secured debt of MXN3 billion including the senior secured guaranteed notes, finance leases, and bank loans recovers approximately 48%, resulting in RR4 ratings for the companys debt.
Recovery Analysis Grupo Senda Autotransporte, S.A. de C.V.

(MXN Mil., As of June 30, 2012) Going Concern Enterprise Value EBITDAR Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Secured Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims 898 50 449 3.5 1,571 383 60 443 1,571 157 1,414
Lien 2,950
Value Recovered 1,414 1,414 1,414 0.0 0.0 0.0 Value Recovered
Recovery (%) 48
Recovery Rating RR4
Notching 0
Rating B
Unsecured Priority Senior Unsecured Source: Fitch Ratings.
Lien
Recovery
Concession Allocation
Recovery Rating
Notching
Rating
139
Corporates
Organizational Structure Grupo Senda Autotransporte S.A. de C.V. and Subsidiaries
LTM June 2012 Summary Statistics (MXN Mil.) EBITDA 897.68 Cash and Marketable Securities 101.94 Short-Term Debt 416.73 Long-Term Debt 2,533.74 Total Debt 2,950.47 Total Debt/ EBITDA 3.29
GRUPO SENDA
USD150 Mil. Senior Secured Guaranteed Notes Due 2015a
Transportes Tamaulipas, S.A. de C.V. Transportes del Norte MexicoLaredo Y A.S.I., S.A. de C.V. Autobuses Coahuilenses, S.A. de C.V. Multicarga, S.A. de C.V.
98%
Servicio Industrial Regiomontano, S.A. de C.V. Servicio Industrial Coahuilense, S.A. de C.V. Servicios Integrados de Transporte, S.C. Transportes Rodriguez de Saltillo, S.A. de C.V. Senda Servicio Industrial, S.A. de C.V. Transportes Industriales Chihuahuenses, S.A. de C.V. Servicio Industrial Potosino, S.A. de C.V. Transporte Industrial Jalisciense, S.A. de C.V.
Personnel Transportation Services
98%
Turimex del Norte S.A. de C.V. Turimex, LLC
98%
98%
98%
98%
98%
98%
Cross-Border Passenger Transportation Services
98%
98%
Servicios T. de N., S.A. de C.V.
90%
98%
Servicios Especializados Senda, S.A. de C.V.
98%
98%
Domestic Passenger Transportation and Package Delivery Services
98%
98%
of Grupo Sendas subsidiaries guarantees notes jointly and severally on a senior secured basis. Source: Fitch and Grupo Senda Autotransportes S.A. de C.V. and subsidiaries (Grupo Senda) financial statements.
aEach
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Debt and Covenant Synopsis Grupo Senda Autotransporte S.A. de C.V. (Grupo Senda)
(Foreign Currency Notes) Overview Issuer Guarantors Grupo Senda Autotransporte S.A. de C.V. (Grupo Senda) and Subsidiaries Payment of principal of premium, if any, and interest on the notes is guaranteed jointly and severally on a senior secured basis by each of the following Grupo Senda subsidiaries (subsidiary guarantors): Transportes Tamaulipas, S.A. de C.V.; Transportes del Norte Mxico Laredo y Anexas Servicios Internacionales S.A. de C.V.; Multicarga, S.A. de C.V.; Servicio Industrial Regiomontano, S.A. de C.V.; Servicio Industrial Coahuilense, S.A. de C.V.; Rutas de Saltillo, S.A. de C.V.; Transportes Rodriguez de Saltillo, S.A. de C.V.; Senda Servicio Industrial, S.A. de C.V.; Transportes Industriales Chihuahuenses, S.A. de C.V.; Servicio Industrial Potosino, S.A. de C.V.; Transporte Industrial Jalisciense, S.A. de C.V.; Turimex del Norte, S.A. de C.V.; Turimex LLC, Servicios Integrados de Transporte, S.A. de C.V.; Coach Investments, LLC; Servicios Especializados Senda, S.A. de C.V.; Servicios TDN, S.A. de C.V.; and Autotransportes Adventur, S.A. de C.V. Sept. 26, 2007 Oct. 3, 2015 Senior Secured Guaranteed Notes USD150 Mil. The notes will rank equally with all of the company and the subsidiary guarantors existing and future senior secured indebtedness, and senior to all of the company and the subsidiary guarantors existing and future subordinated indebtedness. If there are any other nonguarantor subsidiaries in the future, the notes and guarantees will be structurally subordinated to their indebtedness. The notes will be secured on a first-priority basis (subject to certain permitted liens) by liens: 1) on all capital stock held or beneficially owned by Grupo Senda, the subsidiary guarantors, and Autobuses Coahuilenses, S.A. de C.V.; 2) on all of Grupo Senda and the subsidiary guarantors inventories and transportation and other equipment; and (3) on all of Grupo Senda and the subsidiary guarantors real property, including land and buildings. Under the terms of the indenture governing the notes, Grupo Senda and the subsidiary guarantors may, from time to time after the date of issuance of the notes, grant liens on the collateral to secure additional permitted secured obligations, which may only consist of certain one or more 1) credit facilities to be limited in the aggregate to a principal amount of USD20 million and 2) working capital facilities entered into with one or more Mexican or international financial institutions that are not Grupo Sendas affiliates at any time prior to or after the date of issuance of the notes and certain trade payables to be limited in the aggregate to a principal amount of USD10 million. Financial Covenants Limitation on Incurrence of Additional Indebtedness Grupo Senda will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, including acquired indebtedness (such acquired indebtedness having not been incurred in connection with, or in anticipation or contemplation of, the relevant acquisition, merger, or consolidation), except that 1) any nonguarantor restricted subsidiary may incur acquired indebtedness (other than acquired indebtedness incurred in connection with, or in contemplation of, the merger with such nonguarantor restricted subsidiary) and 2) Grupo Senda and any subsidiary guarantor may incur indebtedness, including acquired indebtedness, if at the time of and immediately after giving pro forma effect to the incurrence thereof and the application of the proceeds there from, the consolidated leverage ratio of Grupo Senda is not greater than 3.25 to 1:00 and no default or event of default shall have occurred and be continuing at the time such additional indebtedness is incurred. During the third quarter of 2010, the company launched a consent solicitation to amend the covenant under the Indenture restricting the ability of the company to incur additional indebtedness and certain related provisions contained in the indenture. By providing the requisite consents and allowing the company and the other parties thereto to enter into the supplemental indenture, holders agreed to replace the definition of consolidated leverage ratio in the Indenture with a definition of consolidated fixed charge coverage ratio, which is the ratio of consolidated EBITDA to consolidated fixed charges, calculated for four consecutive quarters. The amendments allow the company and any subsidiary guarantor to incur indebtedness if the incurrence of such indebtedness results in a consolidated fixed charge coverage ratio greater than 2.00 to 1.00. Acquisitions/Divestitures Change of Control Provision Upon the occurrence of a change of control, the holders of the notes will have the right subject to certain exceptions to require the issuer to repurchase some or all of the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date. The indenture governing the notes contains covenants that limit future actions to be taken, or transactions to be entered into, by Grupo Senda and the restricted subsidiaries. The indenture limits Grupo Senda and the restricted subsidiaries ability to, among other things: 1) incur additional indebtedness; 2) pay dividends on Grupo Sendas capital stock or redeem, 3) repurchase or retire Grupo Sendas capital stock or subordinated indebtedness; 4) make investments or certain other restricted payments; 5) guarantee debts; 6) create liens; 7) create any consensual limitation on the ability of Grupo Sendas restricted subsidiaries to pay dividends, 8) make loans or transfer property to us; 9) engage in sale-leaseback transactions; 10) engage in transactions with affiliates; 11) sell assets, including capital stock of Grupo Sendas subsidiaries; and 12) consolidate, merge or transfer assets. Others Limitation on Transactions with Affiliates Grupo Senda will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service) with, or for the benefit of, any of its affiliates (each an affiliate transaction), unless: 1) the terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arms-length basis from a person that is not an affiliate of the company; 2) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD5 million, the terms of such affiliate transaction will be approved by a majority of the members of the board of directors of Grupo Senda; and, 3) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD10 million, the company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to Grupo Senda and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. Grupo Senda will not, in a single transaction or series of related transactions, consolidate or merge with or into any person (whether or not Grupo Senda is the surviving or continuing person), or sell, assign, transfer, lease, convey, or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey, or otherwise dispose of) all or substantially all of Grupo Sendas properties and assets (determined on a consolidated basis for Grupo Senda and its restricted subsidiaries), to any person unless. This restriction is subject to several exceptions.
Document Date Maturity Date Description of Debt Amount Ranking and Collateral
Certain Covenants
Limitation on Consolidations or Mergers
Continued on next page. Source: Grupo Senda and Fitch Ratings.
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Debt and Covenant Synopsis Grupo Senda (Continued)
(Foreign Currency Notes) Other Events of Default The main events of default are: 1) default in the payment when due of the principal of or premium, if any, on any notes, including the failure to make a required payment to purchase notes tendered pursuant to an optional redemption, change of control offer, or an asset sale offer; 2) default for 30 days or more in the payment when due of interest, additional amounts or liquidated damages, if any, on any notes; 3) the failure to perform or comply with certain provisions related to mergers, consolidation, and the sale of assets; and 4) the failure by Grupo Senda or any restricted subsidiary to comply with any other covenant or agreement contained in the indenture or in the notes for 30 days or more after written notice to Grupo Senda from the trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes. Cross default when an uncured event of default occurs for debt of more than USD10 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. The indenture, the guarantees, and the notes will be governed by the laws of the state of New York. On or prior to Oct. 3, 2011, the notes will be redeemable, at the option of the issuer, in whole or in part, on any interest payment date, at a redemption price equal to the greater of 1) 100% of the principal amount of the notes to be redeemed or 2) the sum of the present values of the remaining scheduled payments of principal and interest on such notes. After Oct. 3, 2011, the notes will be redeemable, at the option of the issuer, in whole or in part, on any redemption date, at the redemption prices (expressed as percentages of their principal amount at maturity 105.25% in 2011, 103.50% in 2012, 101.75% in 2013, and 100% in 2014 and thereafter.
Cross Default Acceleration Governing Law Optional Redemption
Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Grupo Senda note documentation and Fitch Ratings.
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Financial Summary Grupo Senda Autotransporte, S.A. de C.V. (Grupo Senda)
(MXN 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. 2008 611,438 611,438 19.72 19.72 12.14 (6.00) (41.00) 1.40 1.69 1.69 0.77 0.77 1.40 0.23 0.47 0.43 5.96 4.94 4.63 4.94 4.63 13.11 0.14 4,622,169 191,581 431,846 2,588,235 3,020,081 3,020,081 3,020,081 1,154,169 4,174,250 144,475 (8,228) 136,247 (318,674) (182,427) 39,451 120,618 (22,358) 3,101,126 4.47 277,964 362,445 (552,222) 2009 527,568 527,568 16.76 16.76 9.94 (6.00) (37.00) 0.92 1.36 1.36 0.69 0.69 0.92 0.27 0.46 (2.00) 8.08 5.49 5.21 5.49 5.21 13.13 0.13 4,111,073 146,392 375,179 2,521,336 2,896,515 2,896,515 2,896,515 707,812 3,604,327 (30,134) (95,165) (125,299) (56,434) (181,733) (13,389) 149,933 (45,189) 3,147,789 1.50 161,611 388,463 (343,772) 2010 765,133 765,133 21.81 21.81 19.84 7.10 (1.00) 1.77 2.03 2.03 1.02 1.02 1.77 0.84 1.02 4.00 4.03 3.52 3.35 3.52 3.35 13.5 0.14 3,994,662 132,826 370,229 2,326,021 2,696,250 2,696,250 2,696,250 679,173 3,375,423 291,958 40,091 332,049 (82,993) 249,056 (262,622) (13,566) 3,508,730 11.47 432,046 377,634 (6,033) 2011 812,577 812,577 22.17 22.17 20.94 (1.00) (55.00) 1.91 2.10 2.10 0.92 0.92 1.91 0.39 0.59 0.89 4.25 3.88 3.67 3.88 3.67 13.27 0.16 4,167,989 168,808 495,491 2,653,689 3,149,180 3,149,180 3,149,180 387,965 3,537,145 352,813 (45,947) 306,866 (346,321) (39,455) 75,437 35,982 3,664,654 4.44 482,996 387,851 (290,982) LTM Ended 6/30/12 897,677 897,677 23.72 23.72 21.59 2.32 (32.01) 1.94 2.34 2.34 1.12 1.12 1.94 0.59 0.72 1.41 3.96 3.29 3.17 3.29 3.17 13.61 0.14 4,102,580 101,942 416,729 2,533,742 2,950,471 2,950,471 2,950,471 498,438 3,448,909 361,486 (59,368) 302,118 (214,155) 87,963 (116,960) (28,997) 3,784,747 4.75 568,970 383,186 (189,719)
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Industrias Metalurgicas Pescarmona S.A.I.C y F. (IMPSA)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR B+ B+/RR4 B+
Key Rating Drivers

Growing Business Presence in Brazil: Industrias Metalurgicas Pescarmona S.A.I.C y F. (IMPSA) is a manufacturing company based in Argentina, with growing operations in Brazil. For the last 11 months ended December 2011, 53% of revenues and 38% of EBITDA came from Brazil. The growth of its business in Brazil has reduced IMPSAs exposure to more volatile markets such as Argentina and has increased its access to multiple funding sources. This increase in funding sources has reduced concerns about IMPSAs need to finance its working capital needs in Argentina should trading conditions in that market deteriorate. It has also enabled the companys foreign currency rating to exceed the B country ceiling of Argentina. Positive Business Fundamentals: IMPSAs B+ ratings reflect the positive trend for the companys long-term business fundamentals due to sustained global demand for hydro and wind power generating equipment. As of June 2012, IMPSAs backlog was USD 3.6 billion with 79% in wind manufacturing, 61% in projects with third parties, and 43% in Brazil. The actual backlog shows an improvement from the USD3.16 billion during January 2011. Given the longterm production cycle of IMPSAs developments (usually in the range of four years for hydro and 1218 months for wind farms), this backlog level provides some certainty to the companys cash generation in the medium term. Backlog Concentration Poses Risk: Backlog concentration for this industry is high, with five projects representing 56% of total backlog at June 2012. The main project in the hydro equipment business unit is the Belo Monte hydro project in Brazil, whereas the main projects in the wind equipment unit are Arauco IV (Argentina) and Ceara III (Brazil). Negative Free Cash Flow: The companys free cash flow (FCF) is anticipated to remain negative during 2012 and 2013 due to high capital expenditure levels and growing working capital needs. Investments in the construction of wind farms are estimated at approximately USD450 million for fiscal year-end 2012 and USD560 million for fiscal year-end 2013. Much of the cash deficit will be funded with nonrecourse project financing to develop wind farm projects in Brazil.
Rating Outlooks
Financial Data
Industrias Metalurgicas Pescarmona S.A.I.C y F. (USD Mil.) Revenue EBITDA Cash Flow from Operations Cash and Marketable Securities Total Recourse Debt Total Recourse Debt/EBITDA (x) Net Recourse Debt/EBITDA (x) 6/30/12 6 Months 451.6 107.6 (143.8) 60.8 957.8 4.6 4.3 12/31/11 11 Months 1,150.5 200.0 (318.0) 95.8 835.4 3.8 3.4
Note: IMPSA changed to IFRS in April 2011 and changed the fiscal year end to December. Figures as of December 2011 are 11 months and as of June 2012 are six-month figures. Ratios have been calculated by annualizing income statement and cash flow items of 11months and six months, respectively.

Changes in Financing Strategy: The companys ratings could be downgraded or a Negative Outlook could be assigned if recourse financing increases above levels anticipated by Fitch, or if IMPSA changes its existing strategy of financing the development of wind farms with debt from nonrecourse project financing. Analysts
Operating Issues: Any material performance problems that threaten future projects and cash flow, or a failure to comply with the terms for the operation of the wind farms (for which longterm PPAs have been signed with Eletrobras and the CCEE and are financed by BNDES) could also result in a Negative Outlook or downgrade. A sharp decline in demand for wind farms would also be negative.
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Recovery Rating
The recovery ratings for IMPSAs capital market debt instruments reflect Fitchs expectation that the companys creditors will anticipate an average recovery of 30%50%. This recovery level is constrained by the soft cap of RR4 for bonds issued by corporates domiciled in Argentina. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is slightly below the average ratio observed for many companies involved in diversified manufacturing and capital goods.
Recovery Analysis Industrias Metalurgicas Pescarmona S.A.I.C. y F.

(USD Mil.) Available to Creditors 41.2 66.0 45.0 152.1 Going Concern Enterprise Value June 2012 annualized EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Secured Lien 0.0 Value Recovered Recovery (%) 0 Concession Allocation (%) 100 Recovery Rating Recovery Rating RR4 Notching Rating Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate (%) 0 80 50 20
215.2 40 129.1 4.0 516.5 135.8 20.0 155.8 516.5 51.6 464.8
60.8 51.5 131.9 224.9 469.1
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims
464.8 464.8
Lien 957.8
Value Recovered Recovery (%) 464.8 49
Notching
Rating B+
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Organizational Structure Industrias Metalurgica Pescarmona S.A.I.C. Y F.
June 2012 Summary Statistics

USD107.6 Million of EBITDA (6 Months) USD60.8 Million of Cash and Marketable Securities USD1,343 Million of Total Debt USD958 Million of Total Debt with Recourse
Industrias Metalrgicas Pescarmona S.A.I.C. y F.

USD225 Million Senior Unsecured Notes Due 2014
100% Inverall Constr. SA. (Brazil)
100% WPE (Brazil)
Guaranteed
55% Energimp (Brazil)
100% Venti Energia (Brazil)
100% WPE International Cooperatief (Netherlands)
45% FI-FGTS
Source: Fitch and Industrias Metalrgicas Pescarmona S.A.I.C. y F.
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Debt and Covenant Synopsis Industrias Metalrgicas Pescarmona S.A.I.C. y F.
Overview
Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Leverage (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Industrias Metalrgicas Pescarmona S.A.I.C. y F. N.A. Sept. 7, 2007 2014 Senior Guaranteed Notes N.A. N.A. Change-of-control clause at 101% of principal. The company will not and will not permit any restricted subsidiary to make any asset disposition unless: 1) the consideration received at the time of the sell is equal to the fair value of the shares or assets sold; 2) at least 75% of that consideration is received in the form of cash or temporay cash investments; 3) the company or the restricted subsidiary applies 100% of the net cash proceeds within 360 days to: repay senior debt, reinvest, or purchase additional assets. The company will not and will not permit any restricted subsidiary transfer, convey, lease, sell, or dispose of any voting stock of any restricted subsidiary, except: to the company or to other restricted subsidiary; in compliance with the Limitation on Sales of Assets or, Limitation on Restricted Payments covenants. The company will not and will not permit any restricted subsidiary to incur any indebtedness. Exceptions are: 1) on the date of such incurrance, the interest coverage ratio would be no less than 2x and total debt to EBITDA no greater than 4x; 2) no default or event of default shall have occurred. This covenant does not prohibit the incurrance of the following debt: 1) intercompany indebtedness within certain restrictions; 2) indebtedness represented by the notes, or outstanding on the issue date, or consisting on refinancing indebtedness; 3) hedging obligations; 4) subordinated indebtedness; 5) debt in an aggregate principal amount not exceeding USD50 million; 6) Short-term debt for the ordinary course of business not exceeding USD40 million during the first year after the issuance, USD20 million prior to the second anniversary and USD10 million thereafter; 7) debt in addition to that referred to in 1 not exceeding USD100 million/USD75 million (year one from covenant changes as of May 2011)/USD50 million (year two)/USD25 million thereafter. The company will not and will not permit any of its restricted subsidiaries to: 1) declare or pay any dividend other than: a) dividends payed in shares of its common stock, b) dividends payed on a pro rata basis of the holders of such common stock; 2) purchase, redeem, or acquire any capital stock of the company or subsidiaries; 3) purchase, redeem, or retire for value, prior to scheduled maturity, any debt which is subordinated to the notes; 4) make any investments other than permitted investments. The company will not and will not permit any of the restricted subsidiaries to assume any lien (except for permitted ones) upon its property, unless at the same time the obligations under the notes are secured equally. The company will not and will not allow its restricted subsidiaries to enter into a transaction with affiliates, unless: 1) the transaction is on terms that are no less favorable than those that would have been obtained in a comparable transaction with a person that is not an affiliate; 2) the company delivers to the trustee: a) for transactions in excess of USD10 million, a resolution from its board of directors, b) for transactions in excess of USD15 million an opinion as to the fairness of that transaction from a financial point of view, issued by an international investment bank. The company or its restricted subsidiaries will not enter into any sale and lease back transactions unless persuant to the provisions of the covenant described under limitation on Indebtedness. Not allowed unless: 1) immmediately after giving effect to that transaction no event of default shall have occurred; 2) any corporation formed by such merger is a sociedad anonima organized and validly existing, and expressly assumes the debt service of the notes; 3) immideately after that merger the company could inccur in USD1 of additional debt, in line with the Limitation on Indebtedness covenant; 4) the successor agrees to indemnify any holder against (i.e. tax issues); 5) within 180 days the credit ratings of the notes shall not be lower as a result of the merger.
Limitation on Sale of Restricted Subsidiaries
Debt Restrictions Additional Debt Restriction
Restricted Payments
Other Limitation on Liens Transactions with Affiliates
Sale and Leaseback Transactions Mergers, Consolidations, Sales, Leases
N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Industrias Metalrgicas Pescarmona S.A.I.C. y F. and Fitch Ratings.
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Financial Summary Industrias Metalurgicas Pescarmona S.A.
(USD 000, Fiscal Years Ended Jan. 31 until January 2011; Dec. 31 since December 2011) Period-End Exchange Rate Average Exchange Rate 4.5238 4.3053 4.4110 4.1295 6 Months 11 Months 6/30/12 12/31/11 107,609 24.12 0.57 1.60 0.46 0.57 (0.46) (0.33) 18.06 6.40 6.11 10.13 0.24 4.56 4.27 2,017,386 60,776 324,164 1,019,227 1,343,391 1,343,391 0 1,343,391 957,792 132,297 1,475,687 (29,269) (114,552) (143,820) 0 (33,772) 0 (177,592) 0 (1,824) 146,663 0 (32,752) 451,599 89,913 67,875 0 (13,995) 200.048 17.39 (1.74) 2.68 0.64 (1.74) (0.94) (0.65) (8.47) 5.50 5.06 6.79 0.22 3.83 3.39 1,957,000 95,892 258,746 941,875 1,200,621 1,200,621 0 1,200,621 835,446 157,406 1,358,028 (204,742) (113,328) (318,070) 0 (48,461) 0 (366,531) 0 (1,644) 415,751 0 47,576 1,150,532 169,350 74,735 0 47,858 3.9787 3.9134 2011 183,805 18.10 (10.70) (26.70) 41.70 (2.00) 3.20 0.80 (2.00) (0.90) (0.70) (3.20) (7.60) 4.60 4.30 8.00 0.20 3.49 3.20 1,508,993 53,313 169,816 677,041 846,857 846,857 0 846,857 633,021 180,091 1,026,948 (169,477) (36,434) (205,911) 0 (64,765) 0 (270,676) 0 159 261,562 0 (8,955) 1,012,939 65.8 160,540 57,312 0 60,963 3.8340 3.7990 2010 102,070 16.70 0.20 (4.80) 4.00 0.00 1.60 0.60 0.00 0.20 0.50 (0.70) 442.00 5.60 5.00 10.80 0.20 4.30 3.69 1,004,844 62,417 115,200 461,229 576,429 576,429 0 576,429 438,803 110,700 687,129 (60,750) 48,580 (12,170) 0 (17,051) 0 (29,221) (19,967) 15,631 20,545 0 (13,012) 610,964 27.7 87,098 62,054 0 4,287 3.4855 3.1900 2009 107,150 22.40 7.80 (51.30) 7.50 1.20 2.30 0.70 1.20 (1.30) (0.70) (6.30) 10.00 5.40 4.50 9.40 0.20 4.20 2.97 909,189 92,969 110,774 464,776 575,550 575,550 0 575,550 411,704 102,638 678,188 10,747 (222,510) (211,763) 0 (33,652) 0 (245,414) (8,023) (11,552) 211,685 0 (53,304) 478,472 63.8 94,961 46,959 0 7,916 3.0905 3.0857 2008 69,288 23.70 4.80 (4.80) 14.90 0.80 2.10 1.40 0.80 0.40 3.40 (1.00) 16.40 6.10 4.00 9.40 0.00 5.18 3.03 754,516 148,688 16,437 407,574 424,011 424,011 0 424,011 358,621 109,349 533,360 (7,493) 373 (7,120) 0 (6,878) 0 (13,998) (35,844) 2,114 170,080 647 122,998 292,163 10.9 55,074 33,356 0 14,807 3.1080 3.0752 2007 56,732 21.50 6.00 (14.70) 13.10 0.90 2.30 0.40 0.90 (0.10) 0.10 (9.30) 12.50 5.00 4.50 9.50 0.20 0.40 531,221 27,791 123,622 158,973 282,595 282,595 0 282,595 89,478 372,073 (2,226) (32,640) (34,866) 0 (3,748) 0 (38,614) (11,410) 27 52,403 2,189 4,595 263,504 8.9 43,863 24,874 0 10,690
Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Debt with Recourse/EBITDA Net Debt with Recourse/EBITDA Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Debt with Recourse Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Note: Numbers may not add due to rounding. Source: Industrias Metalrgicas Pescarmona S.A.I.C. y F. and Fitch.
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Corporates
(ARS 000, Fiscal Years Ended Jan. 31 until January 2011; Dec. 31 since December 2011) 6 Months 11 Months 6/30/12 12/31/11 Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Debt with Recourse/EBITDA Net Debt with Recourse/EBITDA Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Debt with Recourse Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Note: Numbers may not add due to rounding. Source: Industrias Metalrgicas Pescarmona S.A.I.C. y F. and Fitch. 474,664 24.1 0.6 1.6 0.5 0.6 (0.5) (0.3) 18.1 6.4 6.1 10.1 0.2 4.6 4.3 9,126,251 274,940 1,466,453 4,610,779 6,077,232 6,077,232 0 6,077,232 4,332,860 598,483 6,675,715 861.266 17.4 (1.7) 2.7 0.6 (1.7) (0.9) (0.7) (8.5) 5.5 5.1 8.2 0.2 3.8 3.4 8,425,474 412,844 1,113,981 4,055,053 5,169,034 5,169,034 0 5,169,034 3,596,846 677,682 5,846,716
2011 719,302 18.1 (10.7) (26.7) 41.6 (2.0) 3.2 0.8 (2.0) (0.9) (0.7) (3.2) (7.7) 4.7 4.0 7.3 0.2 3.5 3.2 6,003,831 212,117 675,646 2,693,744 3,369,390 3,369,390 0 3,369,390 2,511,827 716,528 4,085,918
2010 391,337 16.7 0.2 (4.8) 4.2 0.0 1.6 0.6 0.0 0.2 0.5 (0.7) 442.0 5.6 4.4 8.0 0.2 4.3 3.7 3,852,570 239,306 441,677 1,768,353 2,210,030 2,210,030 0 2,210,030 1,682,369 424,423 2,634,453 (232,915) 186,255 (46,660) 0 (65,375) 0 (112,035) (76,554) 59,930 78,770 0 0 (49,889) 2,342,436 53.5 333,935 237,915 0 16,435
2009 341,809 22.4 7.8 (51.3) 7.3 1.2 2.3 0.6 1.2 (1.2) (0.6) (6.3) 10.9 5.9 5.0 11.3 0.2 4.2 3.3 3,168,977 324,043 386,103 1,619,978 2,006,081 2,006,081 0 2,006,081 1,434,996 357,745 2,363,826 34,283 (709,806) (675,523) 0 (107,349) 0 (782,872) (25,592) (36,852) 675,275 0 0 (170,041) 1,526,327 69.3 302,925 149,798 0 25,252
2008 213,801 23.7 4.8 (4.8) 14.8 0.8 2.1 1.4 0.8 0.4 3.4 (1.0) 16.4 6.1 4.9 9.0 0 5.2 3.0 2,331,831 459,520 50,798 1,259,608 1,310,406 1,310,406 0 1,310,406 1,108,319 337,944 1,648,350 (23,120) 1,150 (21,970) 0 (21,224) 0 (43,194) (110,605) 6,524 524,815 0 1,996 379,536 901,527 11.3 169,943 102,928 0 45,691
2007 174,461 21.5 6.0 (14.7) 13.0 0.9 2.3 0.4 0.9 (0.1) 0.1 (9.3) 12.6 5.0 4.0 9.4 0.2 0.4 1,651,034 86,374 384,216 494,087 878,303 878,303 0 878,303 278,098 1,156,401 (6,846) (100,375) (107,221) 0 (11,526) 0 (118,747) (35,089) 83 161,151 0 6,732 14,130 810,326 14.2 134,889 76,492 0 32,873
(127,564) (881,476) (663,231) (499,263) (487,910) (142,580) (626,827) (1,369,386) (805,811) 0 0 0 (147,190) (208,639) (253,452) 0 0 0 (774,017) (1,578,025) (1,059,263) 0 0 0 (7,948) (7,076) 622 639,217 1,789,931 1,023,596 0 0 0 0 0 0 (142,748) 204,830 (35,045) 1,968,2479 391,876 295,827 0 (60,995) 4,953,384 729,102 321,755 0 206,041 3,964,037 69.2 628,256 224,286 0 238,573
149
Corporates
IRSA Inversiones y Representaciones S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B B+/RR3 BB
Key Rating Drivers

Exposure to Argentinas Volatile Economy: IRSA Inversiones y Representaciones S.A.s (IRSA) local currency issuer default rating is constrained at BB by above-average risks associated with real estate development in Argentina. These risks include sharp downturns in economic activity and devaluation risk, as most of its cash flow is denominated in Argentine pesos and a substantial part of its debt is in U.S. dollars. This is partially mitigated by IRSAs dollar-denominated asset portfolio, investments in assets outside of Argentina, and a long-term debt profile. Transfer and Convertibility Risk: IRSAs foreign currency issuer default rating (IDR) continues to be constrained at B due to the B country ceiling assigned to Argentina by Fitch. Timely payment of U.S. dollar debt obligations could be constrained by the imposition of transfer or convertibility (T&C) restrictions in the event of a sovereign stress. The B+/RR3 rating of the companys foreign debt obligations reflects Fitchs opinion that if IRSA missed the timely payment of debt obligations due to government restrictions, lenders would have above-average recovery prospects due to the strong standalone business and financial profile of the company. Rating Linkage to APSA: Despite lower leverage at Alto Palermo S.A. (APSA), the local currency IDRs of APSA and IRSA have been linked at BB. This linkage reflects factors that align the credit quality of the companies, such as strong strategic ties, and the fact that APSAs upstream dividends represent a relevant part of IRSAs cash flow generation. Strong Business Position: The companys BB local currency IDR reflects its strong performance and positive operating trends. IRSA has a leading position in the shopping center segment within the city of Buenos Aires through its subsidiary, APSA (95.6% owned). The shopping centers segment accounted for 75% of its consolidated operating EBITDA. IRSA is also the leader in the development and management of office buildings in Buenos Aires (14% of consolidated operating EBITDA). The balance of IRSAs operating results is derived from three premium hotels, as well as its residential property development division. Strong Asset Portfolio: The BB local currency IDR rating reflects a moderate level of debt, as well as a manageable liquidity position due to unencumbered assets and land that could be sold. For the real estate industry, the emphasis of Fitchs methodology is on portfolio quality, diversity, and size. IRSAs assets portfolio is strong with USD1.2 billion of undepreciated book capital as of June 30, 2012. These assets are mostly unencumbered, as secured debt represents less than 5% of total debt. Leverage, measured by net debt as a percentage of undepreciated book capital, was 40% at June 30, 2012. This percentage would be lower at market values.
Rating Outlooks
Financial Data
IRSA (USD Mil.) Revenue EBITDA Cash Flow from Operations (CFFO) Cash and Marketable Securities Total Debt Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) CFFO/ Net Debt (x) 6/30/12 364.4 212.0 149.4 84.1 583.9 2.8 2.4 0.3 6/30/11 360.5 190.0 110.2 92.0 593.8 3.1 2.6 0.2

Analysts
Gabriela Catri +54 11 5235-8129 gabriela.catri@fitchratings.com Jose Vertiz +1 212 908-0641 jose.vertiz@fitchratings.com
Aggressive Growth Threatening Capital Structure: The Stable Outlook reflects Fitchs expectations that IRSA will manage its balance sheet to a targeted total debt-to-EBITDA ratio of less than 3.5x. Any significant increase in IRSAs targeted leverage ratio would weaken credit quality and could result in a negative rating action. Changes in Argentinas Country Ceiling: IRSAs foreign currency IDR could be affected by an upgrade or downgrade of the Argentine country ceiling of B.
150
Corporates
Recovery Rating
The recovery ratings for IRSAs notes reflect Fitchs expectation that the companys creditors would have above-average recovery prospects in the event of a default. The recovery analysis anticipates a 92% recovery for senior unsecured bond holders. The notching was capped at B+/RR3, which resulted in a one-notch uplift from IRSAs B foreign currency IDR. The notching above the soft cap of RR4 for bonds issued by Argentine corporates reflects IRSAs strong credit profile and its ability to continue to operate should a potential economic and/or political crisis occur in Argentina. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is consistent with the value observed in the Buenos Aires stock exchange during the last year.
Recovery Analysis IRSA Inversiones y Representaciones S.A.

(USD Mil.) Available to Creditors 53.3 14.6 146.8 214.6 Going Concern Enterprise Value June 30, 2012 FYE EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
212 25 159.0 4.0 636.0 64.9 10.2 75.1 636.0 63.6 572.4
84.1 66.6 29.2 733.8 913.7
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Recovery Rating Recovery Ratinga RR3
572.4 572.4 28.6 543.8
Distribution of Value Secured Priority Senior Secured Lien 0.0 Value Recovered Value Recovered 572.4 Recovery (%) 0 Notching Rating
Lien 583.9
Recovery (%) 98
Concession Allocation (%) 100
Notching +1
Rating B+
Fitch assigned a B+/RR3 to IRSA. Note: The RR3 rating is one-notch higher than the RR4 soft cap for bonds issued by companies domiciled in Argentina. This is a result of the very strong credit profile of IRSA and the high probability that any default by the company would be related to transfer or convertibility restrictions imposed by the government, not a fundamental weakness in the companys financial or business profile. Source: Fitch Ratings.
151
Corporates
Organizational Structure IRSA Inversiones y Representaciones S.A.
Inversiones y Representaciones S.A. Summary Statistics
(USD Mil., FYE June 30, 2012) EBITDA Cash and Marketable Securities Total Debt 212 84 584 USD150 Million Notes Due 2017 USD150 Million Notes Due 2020 USD70 Million Notes Due 2013 and 2014
95.6% Alto Palermo S.A. (APSA) 100% Shopping Centers Alto Palermo Paseo Alcorta Alto Avellaneda Abasto Patio Bullrich Alto NOA Alto Rosario Soleil Factory Villa Cabrera Mendoza Shopping 98% Shopping Center Neuquen 80% Shopping Center Dot Baires Shopping 54% Shopping Center Buenos Aires Design 20% Tarshop 95% Apsamedia 80%
100% Tyrus S.A. 64.01% REIG 9.88% HERSHA 100% IRSA International LLC 30% Metropolitan 885 Third Avenue LLC 50% Liveck 90% Zetol & Vista al Muelle
1.42%
100%
100% RITELCO
5.10%
100%
100% Office Buildings
50% CYRSA
E-Commerce Latina S.A.
Palermo Invest 5.19%
50% 5%
Inversora Bolivar Baicom 5% 5% 5%
Hotels Intercontinental (76.34%) Sheraton Libertador (80%) Llao Llao (50%) 100% Residential Apartments
Horizons
Land Reserves Solares Santa Maria del Plata (100%) Terrenos de Caballito (50%) Puerto Retiro (50%) Canteras Natal Crespo (50%)
29.77% Banco Hipotecario Banco de Credito y 70% Securitizacion 1.86%
5%
Others
Source: Fitch and Inversiones y Representaciones S.A.s public information.
152
Corporates
Debt and Covenant Synopsis IRSA Inversiones y Representaciones S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction IRSA Inversiones y Representaciones S.A. N.A. Jan. 11, 2007; program modified on May 7, 2010 2017, 2020; Notes issued under USD400 million program Senior Unsecured Notes N.A. N.A. Change of control clause at 101% of principal. Neither the issuer nor its restricted subsidiaries can sell assets unless: 1) the consideration at the time of such asset sale at least equals the fair market value of those assets or shares sold; 2) at least 75% of the consideration is received in cash or equivalents, or in assets to be used for permitted business. The company or its restricted subsidiaries should apply 85% of the net cash proceeds within 24 months to: 1) repay debt; 2) invest in a permitted business. Neither the issuer nor restricted subsidiaries are allowed to incur additional debt except permitted debt, unless the consolidated interest coverage exceeds 1,75x, and for guaranteed debt, total guaranteed debt at the company and its restricted subsidiaries is below 30% of consolidated tangible assets. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations; guarantees as long as permitted by the limitation on guarantees; derivatives as long as used for hedging purposes; debt to finance the acquisition of assets related to the core business of the company, as long as it is below 5% of total consolidated tangible assets; debt related to labor claims; short-term bank debt related to the normal course of business. With several exceptions, the issuer and restricted subsidiaries are prohibited from making certain investments, including the acquisitions of stocks, bonds, and notes under certain conditions. The issuer shall not assume any lien upon its assets (with the exception of permitted liens) unless at the same time the obligations of the company under the notes are secured equally. The issuer can designate a subsidiary as nonrestricted only when: 1) there is no event of default at the time of designating that subsidiary; 2) at that time, the company can take additional leverage as determined in the Additional Debt Restriction of at least USD1.00; 3) at that time the company is allowed to make a permitted investment as defined in the Restricted Payments that equals the investment of the company in the designated subsidiary. With several exceptions, the company will not create or allow the existence of any privilege or restriction to the ability of any restricted subsidiary to: 1) paying dividends or debt to the company or any other restricted subsidiary; 2) granting loans to the company or any other restricted subsidiary; 3) transferring any of its assets to the company or any other restricted subsidiary. Restrictions on merger or consolidation of issuer. Exceptions include: 1) the merger of other entities with the issuer provided that surviving entity will be the issuer; 2) if any entity formed by such merger is organized and valid under existing laws, and the surviving entity assumes responsibility towards the debt service of the existing notes. The company will not allow any of its restricted subsidiaries to guarantee IRSAs debt, unless at the same time they provide the same guarantee to the notes. Transactions with affiliates are permitted as long as: 1) the terms of the transaction are not substantially less favorable than those that could be achieved with a nonrelated party; 2) when total payments involving an affiliate exceed the USD5 million, the terms of that transaction should be approved by the majority of the company's board of directors; 3) when total payments involving an affiliate exceed the USD20 million, an independent financial advisor will have to analyze the rational of such transaction and present his opinion to the trustee.
Restricted Payments Limitation on Liens Other Non Restricted Subsidiaries
Dividends and Payments Affecting Restricted Subsidiaries Limits on Consolidations or Mergers Limits on Guarantees Transactions with Affiliates
N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: IRSAs public information and Fitch Ratings.
153
Corporates
Financial Summary IRSA Inversiones y Representaciones S.A.
Period-End Exchange Rate Average Exchange Rate (USD 000, Fiscal Year Ended June 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Net Income Source: Fitch and IRSA Inversiones y Representaciones S.A.s public information. 364,375 1.1 170,741 64,886 65,117 360,501 3.5 146,358 57,706 70,530 348,244 6.4 142,034 38,527 88,027 358,995 3.5 86,975 39,764 46,657 346,991 45.0 81,557 32,036 17,562 239,382 24.3 62,445 21,594 34,703 119,602 29,809 149,410 0 (31,084) (60,583) 57,744 (39,220) (26,098) (10,705) 13,118 (1,612) (6,773) 125,956 (15,713) 110,243 0 (21,957) (61,987) 26,300 0 (167,343) 181,073 202 0 40,232 91,797 (29,740) 62,057 0 (44,332) (14,575) 3,151 0 (79,406) 54,990 12,163 0 (9,102) 113,401 (25,374) 88,027 0 (101,356) (6,924) (20,253) 0 (29,072) (24,528) 0 14,129 (59,724) 108,190 (13,448) 94,742 0 (7,787) (153,888) (5,164) 1,278 (7,192) 52,298 10,412 (102,256) 48,189 4,661 52,850 0 (7,509) (90,552) (28,321) (1,295) 288,220 8,411 0 176,463 4.5238 4.3012 2012 211,998 58.2 14.9 15.8 10.2 2.8 3.3 1.1 2.8 0.6 1.1 4.8 3.2 2.8 2.4 11.0 0.0 0.2 1,459,075 84,142 127,257 456,657 583,915 583,915 0 583,915 596,447 1,180,362 4.1100 3.9998 2011 190,043 52.7 14.0 7.3 9.8 3.2 3.3 0.8 3.2 0.4 0.8 5.0 3.2 3.1 2.6 11.4 0.0 0.3 1,536,572 92,057 166,378 427,474 593,852 593,852 0 593,852 680,935 1,274,787 3.9317 3.8458 2010 184,591 53.0 10.7 0.9 12.3 3.4 4.8 0.9 3.4 0.2 0.7 1.4 3.2 2.3 1.8 9.8 0.0 0.4 1,444,472 85,865 156,203 264,494 420,697 420,697 0 420,697 760,552 1,181,249 3.7925 3.4096 2009 126,914 35.4 13.4 (5.6) 6.4 3.9 3.2 1.0 3.9 0.1 0.7 0.9 2.3 2.8 2.2 9.9 0.0 0.3 1,298,944 68,020 92,414 274,928 367,342 16,164 351,178 0 351,178 673,696 1,024,874 3.0235 3.1247 2008 119,748 34.5 12.0 (44.3) 2.4 4.4 3.7 1.3 4.4 (1.3) 0.1 0.4 3.0 3.5 2.4 7.1 0.0 0.1 3.0905 3.0861 2007 94,297 39.4 6.3 (37.8) 5.3 3.2 4.4 1.0 3.2 (0.8) 1.8 0.4 6.2 4.6 2.1 7.1 0.1 0.1
1,479,071 1,341,174 134,745 229,258 62,892 69,307 370,850 395,542 433,742 15,497 418,245 0 418,245 787,463 464,849 34,422 430,427 0 430,427 678,571
1,205,708 1,108,998
(240,843) (135,892)
154
Corporates
Financial Summary IRSA Inversiones y Representaciones S.A.
(ARS 000, Fiscal Year Ended June 30) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt-Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch and IRSA Inversiones y Representaciones S.A.s public information. 1,567,251 8.7 734,390 279,086 0 280,081 1,441,930 9.0 585,401 230,811 0 282,104 1,323,326 8.4 539,731 146,402 0 334,501 1,220,584 12.6 295,716 135,196 0 158,635 1,084,242 46.8 254,842 100,104 0 54,875 738,756 27.9 192,710 66,642 0 107,097 6,600,565 380,640 575,687 2,065,826 2,641,513 2,641,513 0 2,641,513 2,698,208 5,339,721 514,431 128,213 642,644 0 (133,698) (260,578) 248,368 (168,695) (112,252) (46,044) 56,424 (6,935) (29,134) 6,315,310 378,353 683,813 1,756,919 2,440,732 2,440,732 0 2,440,732 2,798,641 5,239,373 503,800 (62,849) 440,951 0 (87,822) (247,934) 105,195 0 (669,339) 724,256 808 0 160,920 5,633,441 334,872 609,190 1,031,528 1,640,718 63,609 1,577,109 0 1,577,109 2,966,153 4,543,262 348,830 (113,013) 235,817 0 (168,460) (55,385) 11,972 0 (301,742) 208,962 46,220 0 (34,588) 4,935,987 258,475 351,173 1,044,725 1,395,898 61,424 1,334,474 0 1,334,474 2,560,043 3,894,517 385,563 (86,270) 299,293 0 (344,611) (23,541) (68,859) 0 (98,846) (83,395) 0 48,038 (203,062) 4,471,972 407,403 190,153 1,121,264 1,311,417 46,856 1,264,561 0 1,264,561 2,380,893 3,645,454 338,062 (42,021) 296,041 0 (752,562) (24,332) (480,853) (16,137) 3,994 (22,473) 163,416 32,534 (319,519) 4,144,899 708,523 214,193 1,222,423 1,436,616 106,382 1,330,234 0 1,330,234 2,097,124 3,427,358 148,716 14,383 163,099 0 (419,377) (23,175) (279,453) (87,402) (3,995) 889,475 25,958 0 544,583 3.3 2.9 2.5 11.0 0.3 3.3 3.2 2.7 11.3 0.3 3.2 2.2 1.8 9.6 0.4 2.6 3.1 2.5 10 0.3 2.9 3.4 2.3 7.3 0.0 0.1 6.2 4.6 2.1 7.1 0.1 0.1 2.8 3.3 1.1 2.8 0.6 1.1 4.8 3.2 3.3 0.8 3.2 0.4 0.8 5.0 3.4 4.8 0.9 3.4 0.2 0.7 1.4 3.9 3.2 0.9 3.9 0.1 0.7 0.9 4.4 3.7 1.3 4.4 (1.3) 0.1 0.4 3.2 4.4 1.0 3.2 (0.8) 1.8 0.4 911,844 58.2 14.9 15.8 10.2 760,133 52.7 14.0 7.3 9.8 701,446 53.0 10.9 0.9 12.1 431,507 35.4 13.4 (5.6) 6.4 374,177 34.5 12.0 (44.3) 2.5 291,009 39.4 6.3 (37.8) 5.3 2012 2011 2010 2009 2008 2007
155
Corporates
Maestro Peru S.A. (Maestro)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Secured Local Currency Long-Term IDR IDR Issuer default rating. B+ BB/RR3 B+
Key Rating Drivers

Leader Local Player: Maestro Peru S.A. (Maestro) is one of the two largest modern home improvement retailers in Peru. It has an estimated market share of 43%. The company maintains an established and recognized brand and is well positioned as a low-price specialist. Positive Macro and Business Environment: The Peruvian economy is forecasted to post growth rates of 5.8% and 6.2% during 2012 and 2013, respectively, after growing 6.9% in 2011. Maestro is expected to continue to benefit from the solid industry fundamentals of Perus home improvement industry as a result of the countrys positive macroeconomic environment, which is increasing purchasing power of households. Low penetration levels also bode well for the industry and Maestro. Liquidity to Improve Post Issuance: The company is expected to gain financial flexibility with the proposed transaction by improving its debt payment schedule and rebuilding its cash position. The companys liquidity has been relatively weak in the past as the company funded its negative free cash flow from heavy investments with short-term debt. High Leverage: Maestros FCF is expected to remain negative driven by its capex plan. The ratings incorporate an expected increase in the companys gross leverage from 3.6x as of June 30, 2012. Pro forma the transaction amount, which is expected to be up to USD180 million, Maestros leverage will increase to 5.5x. Limited Diversification and Cyclicality Incorporated: Maestro has limited business and geographic diversification as the companys operations are concentrated in one retail business format in Peru. Competition in the market is increasing, but penetration levels remain low. The ratings also consider the sensitivity of the construction and home improvements industry to economic cycles.
Rating Outlooks
Financial Data
Maestro (PEN Mil.) Revenues EBITDAR EBITDAR Margin (%) CFFO Capex FCF FCF Margin (%) Cash Short-Term Debt Total On-Balance Debt Total Off-Balance Debt Total Adjusted Debt Total Adjusted Debt/ EBITDAR (x) EBITDAR/(Interest Expense + Rents) Cash as % of Revenues Cash/Revenues (Days) 6/30/12 12/31/11 1,128 1,019 113 103 10.0 10.1 28 36 155 157 (127) (121) (11.3) (11.9) 16 16 172 125 326 76 402 3.6 3.3 1.4 5 298 80 378 3.7 3.7 1.5 6

Key Rating Drivers: Key rating drivers include the development of the Peruvian macroeconomic environment, the companys margins, leverage, liquidity, and FCF trends. The balance between organic and inorganic growth will also affect credit quality. The Stable Outlook reflects Fitch Ratings expectation that Maestro will continue to deliver positive operating results based on its solid market position and continued favorable trend for Perus home improvement industry during the next few years. Maestro is expected to complete its capex plans as scheduled between 2012 and 2014 without a further increase in leverage (post issuance). A negative rating action could be triggered by a deterioration of the companys credit protection measures due to sizeable negative FCF levels that would require incremental debt. A weakening of liquidity and an increase in short-term debt would also be seen as negative to credit quality. An upgrade is not likely until the company completes its capex plan, reverses its cash flow trends, and lowers leverage, which is not expected to occur during the next 12-month period ended in September 2013.
Analysts
Jose Vertiz +1 212 908-0641 jose.vertiz@fitchratings.com Josseline Jenssen +591 2 277-4470 josselne.jenssen@fitchratings.com
156
Corporates
Recovery Rating
Maestros recovery ratings reflect Fitchs belief that the company would be reorganized rather than liquidated in a bankruptcy scenario. In estimating a going-concern value, Fitch applies a valuation multiple of 5x to the companys discounted EBITDA. Fitch also discounts Maestros normalized operating EBITDA by approximately 24%, which would reflect the sensitivity of the companys cash flow generation in a distressed scenario. After reductions for administrative and cooperative claims, Fitch arrives at an adjusted reorganization value of approximately MXN350 million. Based upon these assumptions, the total senior unsecured debt of MXN534 million recovers approximately 66%, resulting in RR3 ratings for the companys debt. The BB/RR3 ratings on the companys unsecured senior notes debt reflect good recovery prospects that are anticipated to be in the range of 50%70% in the event of a default.
Recovery Analysis Maestro Peru S.A.

(PEN Mil., As of June 30, 2012) Going Concern Enterprise Value EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Unsecured Priority Senior Unsecured (Pro Forma Debt) Source: Fitch Ratings. Lien 534,000 Value Recovered 350,392 Recovery (%) 66 Concession Allocation Recovery Rating RR3 Notching +1 Rating BB 101,616 24 77,865 5.0 389,325 45,795 18,670 13,400 77,865 389,325 38,933 350,392
157
Corporates
Organizational Structure Maestro Peru S.A.
(As of LTM June 30, 2012)
ENFOCA Inversiones S.A.
91.85%
Maestro Peru S.A.

Sales: PEN1,128 Mil. EBITDA: PEN102 Mil. Total Debt: PEN326 Mil. TD/EBITDA (x): 3.2 ATD/EBITDAR (x): 3.6
99%
99.00%
Inmobialiaria Domel
99.00%
Industrias Delta
TD Total debt. ATD Total adjusted debt . Source: Company and subsidiaries financial statements and Fitch.
158
Corporates
Financial Summary Maestro Peru S.A. (Maestro)
(PEN 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR LTM 6/30/12 101,606 112,493 0.09 0.10 0.15 (0.11) 0.19 3.90 4.45 3.33 0.52 0.55 2.97 (0.54) (0.46) 0.18 4.02 3.20 3.05 3.57 3.43 0.09 0.53 843,394 15,640 171,737 153,803 325,540 325,540 76,209 401,749 264,948 666,697 66,313 (38,376) 27,937 (155,101) (127,164) 10,264 (3,653) 142,691 (15,618) 6,520 1,128,380 88,871 22,847 10,887 45,082 2011 91,345 102,824 0.09 0.10 0.15 (0.12) 0.19 4.91 5.53 3.67 0.65 0.67 3.31 (0.74) (0.63) 0.23 4.09 3.26 3.09 3.68 3.53 0.07 0.42 823,004 15,837 124,577 173,488 298,065 298,065 80,353 378,418 244,125 622,543 64,570 (28,605) 35,965 (157,332) (121,367) (6,108) 143,227 (15,618) 134 1,019,425 0.28 79,025 16,521 11,479 42,176 2010 71,375 81,798 0.09 0.10 0.19 (0.01) 0.20 5.75 5.69 3.56 1.08 1.07 3.59 0.10 0.34 0.99 2.75 2.16 1.94 2.77 2.58 0.08 0.35 572,058 15,703 53,752 100,207 153,959 153,959 72,961 226,920 201,949 428,869 59,561 (3,573) 55,988 (56,605) (5,406) (6,023) 20,201 (1,134) 1,219 (10,151) 4,112 797,629 0.21 60,732 12,544 10,423 32,857 2009 54,752 64,522 0.08 0.10 0.15 (0.02) 0.18 2.71 3.28 2.44 0.54 0.58 2.08 0.01 0.12 0.71 4.05 2.82 2.61 3.45 3.27 0.11 0.55 443,636 11,591 84,633 69,813 154,446 154,446 68,390 222,836 133,519 356,355 28,586 10,649 39,235 (55,073) (15,838) 17,329 (2,622) 2,344 1,213 659,264 0.15 43,843 16,708 9,770 18,716
2008
42,272 52,013 0.07 0.09 0.13 (0.15) 0.31 2.40 3.62 2.43 0.46 0.52 1.76 (0.82) (0.71) 0.12 5.83 3.60 3.35 4.24 4.04 0.15 0.52 356,088 10,378 79,330 72,772 152,102 152,102 68,187 220,289 79,216 299,505 16,350 (5,035) 11,315 (97,537) (86,222) 24,601 (13,689) 76,091 781 575,652 35,084 11,663 9,741 12,287
Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt
Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports.
159
Corporates
Marfrig Alimentos S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating B+ B+ B+ BBB+
Key Rating Drivers

High Leverage: Marfrig Alimentos S.A.s (Marfrig) gross and net debt-to-LTM EBITDA ratios were 6.1x and 4.6x, respectively, as of June 30, 2012. This compares to 6.8x and 4.8x, respectively, in 2011. Fitch Ratings expects that Marfrigs leverage ratios will remain high and relatively unchanged at the end of the year. Weak Free Cash Flow Leads to a Negative Outlook: Cash flow generation has been negative during the past six years, with the exception of 2011. While the first half of 2012 showed an improvement in cash flow, Fitch is concerned that the recent rise in grain prices will pressure Marfrigs profitability and reduce cash flow generation in the latter part of 2012 and through 2013, resulting in free cash flow that is neutral to negative, which inhibits the companys ability to deleverage. Earnings Volatility: Protein prices and demand are volatile. Marfrigs profit margins are affected by factors beyond the companys control. These include domestic and international supply and demand imbalances resulting from animal disease and weather conditions, global economic growth, changes in consumption habits, and government-imposed sanitary and trade restrictions. Competitive pressures from other players also affect the companys margins. Strong Business Position: Marfrig is one of Brazils largest producers and exporters of beef, poultry, and pork. The company has a more diversified business profile than most of its peers. Its production base is diversified and 35% of its sales are from exports. A little over one-third of its revenues come from higher value-added processed food. As a result of the recent asset swap with Brazil Foods (BRF), processed and prepared product capacities will more than double. Processed Food Long Term Positive, Short Term Volatility: Marfrigs strategy of reducing commodity protein exposure by increasing its share in processed food, which is less volatile and commands better profit margins, is a credit positive. The asset swap with BRF will strengthen Marfrigs competitive position in the value-added protein products market and is consistent with the companys previous acquisitions. Achieving full capacity will take time and the companys efficiency may decline during the integration period which will pressure margins. Ratings Are Linked: Fitch has linked the B+ ratings of Marfrig Overseas and Marfrig Holdings B.V. to those of Marfrig Alimentos S.A. through its parent and subsidiary rating methodology. Marfrig Alimentos S.A. guarantees the U.S. dollar notes that have been issued by both of these subsidiaries.
Ratings Outlooks
Foreign Currency Long-Term Rating Negative Local Currency Long-Term Rating Negative National Long-Term Rating Negative
Financial Data
Marfrig Alimentos S.A (BRL 000) Revenue Operating EBITDAR Cash Flow from Operations Free Cash Flow Cash and Marketable Securities Total Adjusted Debt/Operating EBITDAR (x) Net Adjusted Debt/Operating EBITDAR (x) 6/30/12 22,361 2,030 1,939 1,111 3,028 6.1 4.6 12/31/11 21,885 1,774 1,502 528 3,477 6.8 4.8
Analysts
Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com Gisele Paolino +55 21 4503-2624 gisele.paolino@fitchratings.com Joseph N. Bormann, CFA +1 312 368-3349 joe.bormann@fitchratings.com

Weakening Credit Profile: A rating downgrade could be triggered by one, or a combination of the following: deteriorating credit metrics, negative cash flow generation, and tight liquidity. A revision of the Outlook to Stable could be triggered by a number of factors that could include financial improvements better than expected given the current operating environment and/or capital injections to repay debt.
160
Corporates
Recovery Worksheet
Marfrigs recovery rating of RR4 indicates that the companys creditors would have average recovery prospects in the range of 31%50% of current principal and related interest in the event of default. Fitch has performed a liquidation analysis in the event of bankruptcy. Fitch has also estimated the enterprise valuation in the event of financial distress. This analysis considers that any debt default by Marfrig would likely be the result of a sudden deterioration in the business environment either by import ban on Brazilian meat due to health considerations by a considerable number of export countries, or by a sharp reduction in meat consumption due to economic distress abroad. It also considers that company operations will remain valuable, but at a relatively low multiple of 5x. The bespoke Marfrig recovery analysis suggests a higher recovery level for the senior unsecured debt that would be consistent with very high recovery levels. Fitch has capped the companys recovery at RR4 due to concerns about recovery prospects for companies domiciled in Brazil.
Recovery Analysis Marfrig Alimentos S.A.

(BRL Mil.) IDR: Going Concern Enterprise Value June 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 544.8 Value Recovered 544.8 Value Recovered 3,193.0 2,798.5 Recovery (%) 0 100 Recovery Rating Notching RR1 +3 Recovery Rating RR1 RR4 RR6 B+ Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Rate (%) 0 80 50 25 Available to Creditors 884.5 1,207.4 1,904.6 3,996.5
2,030.1 25 1,522.6 5.0 7,612.9
3,028.4 1,105.6 2,414.9 7,618.3 14,167.1
(1,300.0) (300.0) (1,600.0) Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims
7,612.9 761.3 6,851.6
6,851.6 544.8 6,306.8
Rating BB+
Unsecured Priority Senior Unsecured Unsecured Convertible Debentures Junior Subordinated Source: Fitch.
Lien 3,193.0 7,157.4 594.0 0.0
Recovery (%) 100 39 0 0
Concession Allocation (%) 100 0 0 0
Notching +3 0 2
Rating BB+ B+ B
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Corporates
Organizational Structure Marfrig Alimentos S.A.
(BRL Mil., As of June 30, 2012)
Marfrig Alimentos S.A. (Consolidated No Debt or EBITDA on HoldCo Level) Total Debt % of Total Debt Cash + Fin. Inv. Net Debt Pf EBITDA ND/EBITDA 11,752 100 3,028 8,724 2,456 3.6
USD375 Mil. Sr. Notes due 2016 USD500 Mil. Sr. Notes due 2020
Seara Foods Total Debt % of Total Debt Cash + Fin. Inv. Net Debt Pf EBITDA ND/EBITDA 3,767 32 713.7 3,053 1,517 2.0
Marfrig Beef Total Debt % of Total Debt Cash + Fin. Inv. Net Debt Pf EBITDA ND/EBITDA 6,244a 58 1,175 5,069 939 5.4
Marfrig Overseas Ltd . Total Debt % of Total Debt Cash + Fin. Inv. Net Debt Pf EBITDA ND/EBITDA 1,742a 5 1,139 602 0 N.A.
USD750 Mil. Sr. Notes due 2018
Marfrig Hold (Eur) BV Total Debt % of Total Debt 2,342a 23
Nova Seara (BR) Total Debt % of Total Debt 1,425 9
BRL300 Debentures 1st Tranche (IPCA) BRL300 Debentures 2nd Tranche (CDI)
Moy Park
Keystone Foods
Seara Holdings Eur BV
Secculum
Unifred
Athena
aPrincipal
+ accrued interests. ND Net debt. Pf Pro forma. Source: Marfrig Alimentos S.A.
162
Corporates
Debt and Covenant Synopsis Marfrig Alimentos S.A.
Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Ranking Marfrig Overseas Limited Marfrig Frigorficos e Comrcio de Alimentos Ltda. Nov. 16, 2006 Nov. 16, 2016 Senior Guaranteed Notes USD375 Million The issuance is unconditionally and irrevocably guaranteed by Marfrig and ranks equally with Marfrigs senior unsecured indebtedness. Marfrig Overseas Limited Marfrig Alimentos S.A. April 29, 2010 April 29, 2020 Senior Guaranteed Notes USD500 Million The issuance is unconditionally and irrevocably guaranteed by Marfrig and ranks equally with Marfrigs senior unsecured indebtedness. Marfrig Holdings (Europe) B.V. Marfrig Alimentos S.A. May 4, 2011 May 4, 2018 Senior Guaranteed Notes USD750 Million Unconditionally and irrevocably guaranteed by Marfrig Alimentos S.A. and certain of its subsidiaries.
Financial Covenants Net Adjusted Debt/ Pro Forma EBITDA Less than 4.75x Less than 4.75x Less than 4.75x Limitations on The company will not: declare or pay any dividend, purchase or redeem any subordinated obligation prior to the scheduled maturity, or make any Restricted Payments investment if 1) an event of default has occurred; 2) and the net debt-to-EBITDA ratio is greater than 4.75x. Acquisitions/Divestitures Change-of-Control If a change of control occurs, each holder of notes will have the right to If a change of control occurs, each holder of notes will have the right to Provision require Marfrig Overseas and the company to repurchase all or any part require Marfrig Holdings (Europe) B.V. and the company to repurchase of that holders notes pursuant to a change of control offer. In the all or any part of that holders notes pursuant to a change of control change of control offer, Marfrig Overseas and the company will offer a offer. In the change of control offer, Marfrig Holdings (Europe) B.V. and change-of-control payment in U.S. dollars equal to 101% of the the company will offer a change-of-control payment in U.S. dollars aggregate principal amount of notes repurchased plus accrued and equal to 101% of the aggregate principal amount of notes repurchased unpaid interest and additional amounts, if any, on the notes plus accrued and unpaid interest and additional amounts, if any, on the repurchased, to the date of purchase. notes repurchased, to the date of purchase. Other Limitations on Sales of The company will not make any asset disposition unless the following conditions are met: the asset disposition is for fair market value; at least Assets 75% of the consideration consists of cash and temporary cash investments or additional assets; within 360 days after the receipt of any net available cash from the sale, the net available cash may be used: to permanently repay indebtedness, to acquire all or substantially all of the assets of a related business or to acquire additional assets for the company. The net available cash of an asset disposition not applied to the aforementioned within 360 days shall constitute excess proceeds. Excess proceeds of less than USD20 million shall be carried forward and accumulated. When accumulated excess proceeds equal or exceed USD20 million, the company must, within 30 days, make an offer to purchase notes, at purchase price and in U.S dollars, of 100% of their principal amount plus accrued and unpaid interest thereon, to the date of purchase. Optional Redemption The notes may be redeemed at Marfrig Overseass election, as a whole, but not in part, by the giving of notice as provided in the indenture, at a price in U.S. dollars equal to the outstanding principal amount thereof, together with any additional amounts and accrued and unpaid interest to the redemption date. Prior to May 4, 2013, Marfrig Overseas may, at its option on one or more occasions, redeem notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the notes originally issued prior to the redemption date at a redemption price of 109.50%, plus accrued and unpaid interest to the redemption date. Prior to May 4, 2015, Marfrig Overseas will also be entitled at its option to redeem some or all of the notes at a redemption price equal to 100% of the principal amount of the notes plus the applicable premium as of, and accrued and unpaid interest to, the redemption date. On and after May 4, 2015, Marfrig Overseas will be entitled at its option to redeem all or a portion of the notes upon not less than 30 nor more than 60 days notice, at the redemption price (plus accrued interest to the redemption date, if redeemed during the 12-month period commencing on May 4 of the years ended Sept. 30: 2015, 104.750%; 2016, 103.167%; 2017, 101.583%; and 2018 and thereafter, 100%. Some or all of the notes at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, plus the make-whole premium. Up to 35% of the notes with the net proceeds of certain equity offerings at a redemption price equal to 108.375% of the principal amount of the notes plus accrued and unpaid interest to the date of redemption. The redemption can be made only if, after the redemption, at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding.
Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Marfrig Alimentos S.A. and Marfrig Holdings (Europe) B.V. offering memorandums and Fitch Ratings.
163
Corporates
Financial Summary Marfrig Alimentos S.A.
(BRL 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. LTM 6/30/12 2,030,090 2,030,090 9.08 9.08 20.09 4.97 (10.00) 2011 1,773,804 1,773,804 8.11 8.11 18.29 2.41 (12.00) 2010 1,502,466 1,502,466 9.46 9.46 8.00 (7.00) 2.62 2009 819,536 819,536 8.52 8.52 8.15 (4.00) 19.55 2008 753,254 762,158 12.14 12.29 5.96 (20.00) (2.00)
1.82 1.00 1.00 0.37 0.37 1.82 0.58 1.13 2.38
1.70 0.92 0.92 0.38 0.38 1.70 0.52 1.26 1.65
1.03 1.16 1.16 0.33 0.33 1.03 0.03 0.89 0.06
1.29 1.32 1.32 0.36 0.36 1.29 0.09 1.43 0.23
1.01 1.67 1.66 0.43 0.43 1.01 0.18 (2.00)
3.37 6.11 4.62 6.11 4.62 17.39 0.28
3.66 6.75 4.78 6.75 4.78 17.38 0.23
7.64 6.79 4.21 6.79 4.21 16.33 0.32
7.04 6.91 3.20 6.91 3.2 12.22 0.29
10.89 6.01 4.59 6.67 5.26 13.14 0.29
23,511,109 3,028,383 3,431,731 8,980,556 12,412,287 12,412,287 12,412,287 5,946,442 18,358,729
23,823,441 3,476,960 2,771,104 9,193,354 11,964,458 11,964,458 11,964,458 5,898,521 17,862,979
22,599,586 3,876,356 3,221,873 6,985,898 10,207,771 10,207,771 10,207,771 6,496,413 16,704,184
11,451,641 3,033,438 1,639,848 4,019,232 5,659,080 5,659,080 5,659,080 4,197,808 9,856,888
9,155,171 1,071,664 1,306,339 3,223,491 4,529,830 4,529,830 553,710 5,083,540 2,747,768 7,831,308
1,656,568 282,721 1,939,289 (813,265) (14,900) 1,111,124 500,570 (1,783,889) (14,486) (151,874) (338,555)
1,340,774 161,541 1,502,315 (912,820) (61,936) 527,559 (33,795) (72,164) (6,758) (76,070) 338,772
40,697 23,857 64,554 (1,119,059) (99,350) (1,153,855) (2,830,478) 4,844,826 (3,357) (20,219) 836,917
181,343 (60,334) 121,009 (535,483) (414,474) (190,346) (5,319) 1,173,271 1,466,549 (67,907) 1,961,774
6,446 (734,903) (728,457) (485,091) (1,213,548) (1,477,692) (43,831) 1,341,916 1,359,120 55,893 21,858
22,361,458 13.67 1,564,590 2,031,917 (628,649)
21,884,909 37.83 1,032,276 1,927,054 (746,012)
15,878,469 65.13 875,742 1,295,787 140,092
9,615,740 55.00 545,080 622,427 679,079
6,203,797 85.75 724,586 451,542 8,904 (35,500)
164
Corporates
Minerva S.A.
Minerva Luxembourg Ltd.
Full Rating Report
Ratings
Minerva, Minerva Overseas Ltd. and Minerva Overseas II Ltd. Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR Senior Unsecured Minerva National Long-Term Rating IDR Issuer default rating. B+ B+/RR4 B+ BBB(bra) BBB(bra)
Key Rating Drivers

Strong Business Position: Minerva S.A. (Minerva) is the third-largest Brazilian exporter of fresh and frozen beef. It has a low-cost structure, and a diversified and flexible export revenue base. The successful execution of its strategic plan, including an equity issuance during the challenging operating environment of the last few years, further supports Minervas ratings. Volatility of Earnings: Protein prices and demand are volatile by nature. Minervas profit margins are affected by factors beyond the companys control domestic and international supply and demand imbalances resulting from animal disease and weather conditions, global economic growth, changes in consumption habits, and government-imposed sanitary and trade restrictions. Competitive pressures from other Brazilian or international producers and exporters also affect the companys margins. Product Concentration Increases Risks: The ratings incorporate risks associated with geographic and product concentration in beef protein, the potential for disease outbreaks, and the potential negative effect of foreign exchange fluctuations. Minerva is more exposed to these risks than Brazilian competitors such as JBS and Marfrig because of its higher export concentration. Exports represent 65.6% of its revenue in the first quarter of 2012. Positive FCF Expected in 2012: Fitch expects Minervas operations to improve in 2012, helped by moderate volume growth in all of its markets. Stronger cash flow from operations (CFFO) coupled with reduced capital spending should result in weak, but positive, FCF generation in 2012. Minerva has been FCF negative for the past seven years. Leverage Expected to Improve: Minerva's net leverage is expected to decrease to approximately 3.0x by the end of 2012, due to improvements in its operating performance and mildly positive FCF generation. This leverage ratio is considered appropriate for the rating category during a positive cycle. However, a temporary increase in Minerva's leverage ratios is possible due to further weakening of the Brazilian real, as 76.3% of its total debt as of March 31, 2012 was denominated in U.S. dollars. Ratings are Linked: Fitch has linked the B+ ratings of Minerva Luxembourg S.A. through its parent and subsidiary rating methodology. Minerva guarantees the notes that have been issued by this subsidiary.
Rating Outlooks
Financial Data
Minerva S.A. (BRL Mil.) Revenue EBITDA Cash Flow from Operations FCF Cash and Marketable Securities Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) 3/30/12 4,041 372 98 (76) 846 6.3 4.0 12/31/11 3,977 328 (11) (183) 746 6.4 4.1

Negative Rating Action: The ratings are likely to remain stable unless cash flow generation and leverage ratios trend differently than Fitchs expectations. A negative rating action could occur if Fitchs expectations for positive cash flow generation fail to materialize or net leverage does not decline below 4.0x on a normalized basis. This could be a result of either a large debt-financed acquisition or asset purchases, or as a result of operational deterioration. Positive Rating Action: A positive rating action could be triggered by a significant leverage decrease from current levels, but is unlikely to be achieved solely by improving operations in the short-to-medium term.
Analysts
Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com Gisele Paolino +55 21 4503-2624 gisele.paolino@fitchratings.com
165
Corporates
Recovery Rating
Minervas recovery rating of RR4 indicates that the companys creditors would have average recovery prospects in the range of 31%50% of current principal and related interest in the event of default. This rating reflects a recovery rating cap for Brazil issuers of RR4, whereas Minervas modified recovery analysis suggests a higher recovery level for the unsecured debt consistent with RR3. Fitch has performed a liquidation analysis in the event of bankruptcy. However, this scenario seems extremely unlikely given the companys strong business position. Fitch has also estimated the enterprise valuation in the event of financial distress. This analysis considers that any debt default by Minerva would likely be the result of a sudden deterioration in the business environment either by import ban on Brazilian beef due to health considerations by a considerable number of export countries, or by a sharp reduction in beef consumption due to economic distress abroad. It also considers that company operations will remain valuable, but at a relatively low multiple of 5x.
Recovery Analysis Minerva S.A.

(BRL Mil.) IDR: B+ Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Available to Rate (%) Creditors 0 80 165.9 50 108.1 25 282.0 555.9 Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Secured Lien 510.2 Value Recovered 510.2 Recovery (%) 100 Recovery Rating RR1 Notching 3 Rating BB+ 372.0 15 316.2 5.0 1,581.0 746.4 207.4 216.1 1,127.8 2,297.7
180.0 45.0 225.0
1,581.0 158.1 1,422.9
1,422.9 510.2 912.7 45.6 867.1
The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. Recovery (%) 58 0 Concession Allocation (%) 100 0 Recovery Rating RR3 RR6
Unsecured Priority Senior Unsecureda Unsecured Subordinated

a ACC. Source: Fitch.
Lien 1,585.0 182.6
Notching 1 2
Rating BB B
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Corporates
Corporate Structure Minerva (As of March 31, 2012)
Vilela de Queiroz Family (100.0%)
VDQ Holding
Free Float
68.1%
31.9%
Minerva S.A.
LTM EBITDA (BRL Mil.) Consolidated Total Debt (BRL Bil.) TD/EBITDA (x) ND/EBITD 372 2.3 6.3 4.0
100.0% Minerva Log
55.0% Brascasing
92.0% Friasa (Paraguary)
100.0% PULSA (Uruguay)
80.0% Minerva Dawn Farms
100.0% Minerva Overseas I Ltd.
100.0% Minerva Overseas II Ltd.
100.0% Minerva Luxembourg S.A. Finance Subsidiary No Revenue Total Debt (USD Mil.)
100.0% Minerva Colombia S.A.S. 860
Source: Minerva S.A., Fitch.
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Corporates
Debt and Covenant Synopsis Minerva S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Financial Covenants Consolidated Net Debt/EBITDA (Maximum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Minerva Luxembourg S.A. Minerva S.A. Jan. 26, 2007 Feb. 1, 2017 Unsecured and Unsubordinated Debt USD35.2 Million Less than 3.5x. Minerva Luxembourg S.A. Minerva S.A. Jan. 22, 2010 Nov. 15, 2019 Unsecured and Unsubordinated Debt USD373.7 Million Less than 3.5x. Minerva Luxembourg S.A. Minerva S.A. March 22, 2012 March 22, 2022 Unsecured and Unsubordinated Debt USD450 Million Less than 3.5x.
Not later than 30 days following a change of control, Minerva Overseas will make an offer to purchase all outstanding notes at a purchase price equal to 101% of the principal amount plus accrued interest to the date of purchase. Minerva will not, and will not permit any subsidiary to, make any asset sale unless the following conditions are met: (i) the asset sale is for fair market value, as determined in good faith; (ii) at least 75% of the consideration consists of cash or cash equivalents received at closing. No debt will be deemed to be subordinated in right of payment to any other debt solely by virtue of being unsecured or secured on a first or junior lien basis. Neither Minerva nor any guarantor may incur any debt that is subordinate in right of payment to other debt of Minerva or any Guarantor unless such debt is also subordinate in right of payment to the notes or the guaranty on substantially identical terms.
Debt Restriction Additional Debt Restriction Neither Minerva nor any guarantor may incur any debt that is subordinate in right of payment to other debt of Minerva or any Guarantor unless such debt is also subordinate in right of payment to the notes or the guaranty on substantially identical terms. Limitation on Liens Limitation on Sale and Leaseback Transactions Limitation on Restricted Payments
Minerva will not, and will not permit any subsidiary to, directly or indirectly incur or permit to exist any lien of any nature whatsoever on any of its properties or assets without effectively providing that the notes are secured equally and ratably with the obligations so secured for so long as such obligations are so secured. Minerva will not, and will not permit any subsidiary to, enter into any sale and leaseback transaction with respect to any property unless Minerva or such subsidiary would be entitled to: (i) incur debt in an amount equal to the attributable debt with respect to such sale and leaseback transaction; and (ii) create a lien on such property or asset securing such attributable debt without equally and ratably securing the notes. Minerva will not, and will not permit any Minerva will not, and will not permit Minerva will not, and will not permit any Subsidiary to, subsidiary to, directly or indirectly: (i) declare any subsidiary to, directly or directly or indirectly:(i)declare or pay any dividend or or pay any dividend or make any distribution indirectly: (i) declare or pay any make any distribution on its Equity Interests held by on its equity interests held by persons other dividend or make any distribution on Persons other than Minerva or any of its Subsidiaries than Minerva or any of its substantially its equity interests held by persons (other than (A) dividends or distributions paid in wholly owned subsidiaries; (ii) purchase, other than Minerva or any of its Minervas Qualified Equity Interests and (B) dividends redeem or otherwise acquire or retire for subsidiaries; (ii) purchase, redeem or distributions by a Subsidiary payable, on a pro rata value any equity interests of Minerva held by or otherwise acquire or retire for basis or on a basis more favorable to Minerva, to all persons other than Minerva or any of its value any equity interests of Minerva holders of any class of Capital Stock of such substantially wholly owned subsidiaries; or held by persons other than Minerva Subsidiary a majority of which is held, directly or (iii) repay, redeem, repurchase, defease or or any of its subsidiaries; or (iii) indirectly, by Minerva); (ii)purchase, redeem or otherwise acquire or retire for value, or repay, redeem, repurchase, defease otherwise acquire or retire for value any Equity make any payment on or with respect to any or otherwise acquire or retire for Interests of Minerva held by Persons other than subordinated debt except a payment of value, or make any payment on or Minerva or any of its Subsidiaries; or (iii)repay, interest or principal at stated maturity (other with respect to any subordinated redeem, repurchase, defease or otherwise acquire or than a repayment, redemption, repurchase, debt except a payment of interest or retire for value, or make any payment on or with defeasance or acquisition or retirement in principal at stated maturity. respect to, any Subordinated Debt (other than (x) a anticipation of satisfying a sinking fund payment of interest or principal at Stated Maturity or (y) obligation, principal installment or final a repayment, redemption, repurchase, defeasance or maturity, in each case, due within one year acquisition or retirement in anticipation of satisfying a of the date of such repurchase, defeasance sinking fund obligation, principal installment or final or acquisition or retirement) maturity, in each case, due within one year of the date of such repurchase, defeasance or acquisition or retirement);
Dividends Restriction Limitation on Dividend
Minerva will not, and will not permit any subsidiary to, create or otherwise cause or permit to exist or become effective any encumbrance or restriction of any kind on the ability of any subsidiary to (i) pay dividends or make any other distributions on any equity interests of the subsidiary owned by Minerva or any other subsidiary; (ii) pay any debt or other obligation owed to Minerva or any other subsidiary; (iii) make loans or advances to Minerva or any other subsidiary; or (iv) transfer any of its property or assets to Minerva or any other subsidiary. Local Currency Debentures Overview Issuer Minerva S.A. Guarantors VDQ Holdings S.A. Document Date July 10, 2010 Maturity Date July 10, 2015 Description of Debt Simple, unsecured, and nonconvertible in shares. Amount BRL200 Million Financial Covenants Consolidated Net Less than 3.5 x Debt/EBITDA (Maximum) Source: Company and Fitch Ratings.
168
Corporates
Financial Summary Minerva S.A.
(BRL Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt-Service Coverage Operating EBITDAR/Debt-Service Coverage FFO Fixed Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Net Income Source: Fitch. LTM 3/31/12 371,983 371,983 9.2 9.2 21.9 (1.9) (6.0) 1.2 0.7 0.7 0.4 0.4 1.2 0.6 1.6 0.7 3.5 6.3 4.0 6.3 4.0 0.3 0.1 3,619,125 846,276 282,669 2,053,283 2,335,952 2,335,952 2,335,952 714,268 3,050,220 100,050 (1,178) 98,872 (151,715) (23,524) (76,367) 50,031 280,317 (4,455) 72,115 303,836 4,040,658 8.9 326,684 568,862 (37,704) 2011 327,725 327,725 8.2 8.2 13.1 (4.6) 6.1 1.1 1.0 1.0 0.4 0.4 1.1 0.2 1.0 (0.1) 5.5 6.4 4.1 6.4 4.1 0.2 0.3 3,499,191 746,382 541,568 1,561,081 2,102,649 2,102,649 2,102,649 819,405 2,922,054 46,185 (56,771) (10,586) (160,850) (11,762) (183,198) (17,805) 271,080 8,946 90,895 169,918 3,976,977 16.7 282,346 335,365 41,715 72 2010 245,665 245,665 7.2 7.2 2.1 (4.2) 4.3 0.3 1.5 1.5 0.6 0.6 0.3 0.1 1.5 0.3 36.6 6.7 4.3 6.7 4.3 0.1 0.1 2,628,350 576,464 236,891 1,402,508 1,639,399 1,639,399 1,639,399 540,273 2,179,672 (122,546) 191,427 68,881 (206,122) (6,555) (143,796) (166,166) 464,393 3,914 (5,890) 152,455 3,408,205 31.0 216,846 167,281 22,898 23 2009 184,573 184,573 7.1 7.1 1.9 (4.2) 19.5 0.3 1.8 1.8 0.5 0.5 0.3 0.0 1.1 0.2 36.6 6.6 4.3 6.6 4.3 0.1 0.2 2,072,813 424,009 291,071 932,302 1,223,373 1,223,373 1,223,373 527,339 1,750,712 (71,382) 100,657 29,275 (138,595) (109,320) (305) (65,641) 158,999 (26,264) (42,531) 2,602,119 22.7 142,310 104,800 81,992 82 2008 153,376 153,376 7.2 7.2 6.1 (21.9) (51.0) 1.0 1.5 1.5 0.3 0.3 1.0 (0.8) 0.2 (0.3) 13.4 9.2 6.2 9.2 6.2 0.1 0.3 2,018,221 466,540 357,840 1,052,083 1,409,923 1,409,923 1,409,923 314,373 1,724,296 2,648 (116,747) (114,099) (351,013) (465,112) 570,544 (15,338) 90,094 2,120,800 45.0 127,000 102,349 (215,546) (216)
169
Corporates
OAS S.A. (Formerly OAS Engenharia e Participaes S.A.)
Construtora OAS Ltda. and OAS Empreendimentos S.A.
Full Rating Report
Ratings
OAS S.A. and Construtora OAS Ltda. Foreign Currency Long-Term Issuer Default Rating (IDR) B Local Currency Long-Term IDR National Scale Long-Term Rating OAS S.A. 2nd Debentures, Matures 2013 3rd Debentures, Matures 2016 4th Debentures, Matures 2027 5th Debentures, Matures 2015 B BBB(bra)
Key Rating Drivers

High Leverage: The ratings of OAS S.A. and its main operating subsidiary, Construtora OAS Ltda., reflect the groups high leverage, which is a result of its aggressive expansion strategy. The OAS group had a net debt-to-EBITDA ratio of 5.9x during 2011. Satisfactory Liquidity: As of Dec. 31, 2011, OAS reported consolidated cash and marketable securities of BRL1.465 million and total debt of BRL3.753 million. These figures compare with BRL1.163 million of cash and BRL2.620 million of debt at the end of 2010. Fitch expects that OAS will be able to preserve a satisfactory cash reserve to face the groups increased backlog. Operating Results Need to Improve: Group OAS faces the challenge to continue recovering its operating margins on a consistent basis. For a recovery to occur, the company will need to keep heavy construction costs under control, increase the contribution of its infrastructure segment, and improve the operating results of its real estate construction business, OAS Empreendimentos S.A. Construtora OAS: Construtora OAS has historically been the groups main operating company and cash generator. The company is 100% controlled and is operationally integrated with OAS. Construtora OAS also guarantees 47% of OASs consolidated corporate debt, net of project finance loans. In 2011, Construtora OAS accounted for 80% of the groups consolidated revenue and 54% of EBITDA. Robust Backlog: During 2011 and first-quarter 2012, the OAS group continued to maintain high levels of backlog. As of March 31, 2012, Construtora OAS backlog was BRL17.4 billion, which compares to BRL18 billion at year-end 2011 and BRL12 billion on 2010. The current backlog and the positive scenario for the infrastructure sector should ensure the groups growth in the next few years.
BBB(bra) BBB(bra) BBB(bra) BBB(bra)
OAS Empreendimentos S.A. BB+(bra) National Long-Term Rating 2nd Debentures, Matures 2014 BBB(bra) IDR Issuer default ratings.
Rating Outlooks
Financial Data
OAS S.A. (BRL Mil.) Net Revenues Total Adjusted Debt FFO EBITDA Cash Marketable FFO Adjusted Leverage (x) Adjusted Net Debt/EBITDA (x) EBITDA/Debt Service Coverage (x) 12/31/11 4,637.5 3,752.8 554.7 385.2 1,465.0 4.5 5.9 0.3 12/31/10 4,517.2 2,619.5 (32.9) 179.0 1,162.6 20.6 8.1 0.2

Negative Rating Action: The ratings could be negatively pressured by a downturn in heavy construction activities or increased costs that pressure margins. A weaker cash position and higher leverage could also result in a rating downgrade. Positive Rating Action: Ratings upgrades or a change in the Rating Outlook to Positive could result from a continued improvement in operating results, combined with significant leverage reduction and an improved liquidity position.
Analysts
Liliana Yabiku +55 11 4504-2600 liliana.yabiku@fitchratings.com Jose Romero +55 11 4504-2600 jose.romero@fitchratings.com
170
Corporates
Organizational Structure OAS Group
(As of March 31, 2012)
Cesar de Araujo Mara Pires

100%
Jose Adelmario Pinheiro Filho

100%
CMP Participaes Ltda.

90%
LP Participaes Ltda.
10%
OAS S.A.
100%
100%
100%
100%
OAS Investimentos S.A.

25%
OAS Empreendimentos
COESA Engenharia Ltda.
Construtora OAS Ltda.

100%
Invepar S.A.
Investimentos Diretos
SPEs
Consorcios
Sucursais no Exterior
SPEs
Source: Fitch and OAS Group.
171
Corporates
Debt and Covenant Synopsis First Debenture Issued by OAS S.A.
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Provider of Pledge of Shares Principal Repayment (Date/% of Total) Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Issuer Financial Covenant Other Relevant Early Maturity Events OAS S.A. Construtora OAS Ltda. Oct. 29, 2010 Debenture Deed: Oct. 18, 2010 Oct. 29, 2018 First Debenture Simple, Not Convertible BRL400 Million OAS Investimentos S.A.: 8,531,973 voting shares and 17,063,946 preferential shares of Investimentos e Participaes em Infra-Estrutura S.A. INVEPAR. Oct. 29 of the following years: 2013 (16.6666%); 2014 (16.6666%); 2015 (16.6666%); 2016 (16.6666%); 2017 (16.6666%); and 2018 (16.6670%).
Net debt/EBITDA of Construtora OAS not to exceed 3.0x on annual consolidated financial statements. Net debt/total assets of OAS S.A. not to exceed 60% on annual consolidated financial statements. 1. 2. 3. 4. Nonpayment of any financial obligation of this issue by the issuer or guarantors at the respective maturity dates; Noncompliance of any obligation within the established period that may lead to early maturity of any debt obligation of the issuer or guarantor equal to or above BRL20 million; Change or transfer of direct or indirect shareholding control of the issuer reducing to less than 50% plus one share of its voting control or result, by any reason, in the current controlling shareholders not exercising effective control; Split, merger, or incorporation or any form of corporate reorganization involving the issuer or guarantors without the previous knowledge and approval by the debenture holders, unless the operation exclusively involves the issuer and/or guarantors and their subsidiaries and will not result in change of shareholding control of the issuer and/or guarantors; Noncompliance of any financial obligation of the issuer or guarantors of amount equal or above BRL20 million, or equivalent in other currency, or any other obligation that may lead to an early maturity of any financial obligation of the issuer or guarantors of an amount equal or above BRL20 million or equivalent in other currency; Protests against the issuer or guarantors equal or above BRL20 million or equivalent in other currency, unless not legitimate, cancelled, or suspended by judicial decision; Noncompliance of judicial decision against the issuer or guarantors including fiscal executions of an amount equal or above BRL20 million or equivalent in other currencies; Confiscation or pledge of assets of the issuer or guarantors of amount equal or above BRL20 million or equivalent in other currency, unless, legally contested or suspended, within 15 days of the event, or substituted by a guarantee that does not affect or bind the issuer assets; Governmental fiscal or environmental penalties of amount equal or above BRL10 million, unless legally contested within the established period; not legitimated by the issuer and guarantor or cancelled.
5. 6. 7. 8.
9.
Continued on the next page. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: OAS S.A. and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis Second Debenture Issued by OAS S.A. (Continued)
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Principal Repayment (Date/% of Total) Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Issuer Financial Covenant Other Relevant Early Maturity Events OAS S.A. Construtora OAS Ltda June 25, 2011 Debenture Deed: May 25, 2011 June 25, 2013 Second Debenture Simple, Not Convertible BRL200 Million Dec. 25, 2012 (14.28%); Jan. 25, 2013 (14.28%); Feb. 25, 2013 (14.28%); March 25, 2013 (14.28%); April 25, 2013 (14.28%); May 25, 2013(14.28%) and June 25, 2013 (14.32%)
Net debt/EBITDA of Construtora OAS not to exceed 3.0x on annual consolidated financial statements. Net debt/total assets of OAS S.A. not to exceed 60% on annual consolidated financial statements. 1.
2.
3. 4.
5.
6. 7. 8. 9.
Nonpayment, by the issuer, of any financial obligation due to the debenture holders at the respective due dates; Noncompliance, by the issuer, of any nonfinancial obligation as per the debenture deed within the established period or, if not established, within seven working days; Change or transfer of direct or indirect shareholding control of the issuer reducing to less than 50% plus one share of its voting control or result, by any reason, in the current controlling shareholders not exercising effective control; Split, merger or incorporation, or any form of corporate reorganization involving the issuer or the guarantor without the previous knowledge and approval by the debenture holders; Noncompliance of any financial obligation of the issuer or guarantors of an amount equal to or above BRL20 million, or equivalent in other currency, or any other obligation that may lead to an early maturity of any financial obligation of the issuer or guarantors of amount equal or above BRL20 million or equivalent in other currency; Protests against the issuer or guarantors equal to or above BRL20 million or equivalent in other currency, unless not legitimate, cancelled, or suspended by judicial decision; Noncompliance of judicial decision against the issuer or guarantors including fiscal executions, of an amount equal to or above BRL20 million or equivalent in other currencies; Confiscation or pledge of assets of the issuer or guarantors of amount equal or above BRL20 million or equivalent in other currency, unless, legally contested or suspended, within 15 days of the event, or substituted by a guarantee that does not affect or bind the issuer assets; Governmental fiscal or environmental penalties of an amount equal or above BRL10 million, unless legally contested within the established period; not legitimated by the issuer and guarantor or cancelled.
Continued on the next page. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: OAS S.A. and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis Third Debenture Issued by OAS S.A. (Continued)
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Principal Repayment (Date/% of Total) Financial Covenants Financial Covenant Other Relevant Early Maturity Events 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Bankruptcy, dissolution, request of self-bankruptcy, or similar of the issuer or guarantor; Request of extra judicial recovery not eliminated within five days by the issuer or guarantor; Noncompliance by the issuer of any financial obligation established by the debenture deed not solved within seven working days; Noncompliance with the obligation of use of the debenture funds exclusively for debt repayment in accordance with the terms established for this debenture issue; Delinquency by the issuer or guarantor of financial obligation of amount equal or above BRL20 million, or equivalent in other currency, unless proven illegitimate, solved, or legally contested; Noncompliance, within 30 days, of any judicial decision against the issuer or guarantor of amount above BRL20 million, or equivalent in other currency; Protests against the issuer or guarantor of amount above BRL20 million, unless proved to be illegitimate or legally contested; Split, merger, or incorporation of any form of corporate reorganization of the issuer or guarantor since such operations imply the disposal of relevant assets, without agreement from the debenture holders; Change of activity of the issuer with core business no longer being civil construction and real estate development; Capital reduction of the issuer above 10% of equity, unless previously authorized by the debenture holders; Nonrenewal, cancellation, or suspension of authorizations and licenses, including environmental, resulting in adverse effects for the continuation of activities of the issuer. OAS S.A. Construtora OAS Ltda. Dec. 12, 2011 Debenture Deed: Nov. 17, 2011 Dec. 12, 2016 Third Debenture Simple, Not Convertible BRL300 million Dec. 12, 2014 (20%); June 12, 2015 (20%); Dec. 12, 2015 (20%); June 12, 2016 (20%); Dec. 12, 2016 (20%). Net debt/EBITDA of Construtora OAS and/or OAS S.A. not to exceed 3.0x on annual consolidated financial statements; net debt/total assets of Construtora OAS and/or OAS S.A. not to exceed 60%.
174
Corporates
Debt and Covenant Synopsis Fourth Debenture Issued by OAS S.A. (Continued)
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Principal Repayment (Date/% of Total) OAS S.A. Construtora OAS Ltda. Jan. 13, 2012 Debenture Deed: Jan. 6, 2012 Jan. 13, 2027 Fourth Debenture Simple, Not Convertible, Private (FI FGTS) BRL250 million Jan. 13, 2015 (current nominal amount/13); Jan. 13, 2016 (current nominal amount/12); Jan. 13, 2017 (current nominal amount/11); Jan. 13, 2018 (current nominal amount/10); Jan. 13, 2019 (current nominal amount/9); Jan. 13, 2020 (current nominal amount/8); Jan. 13, 2021 (current nominal amount/7); Jan. 13, 2022 (current nominal amount/6); Jan. 13, 2023 (current nominal amount/5); Jan. 13, 2024 (current nominal amount/4); Jan. 13, 2025 (current nominal amount/3); Jan. 13, 2026 (current nominal amount/2); Jan. 13, 2027 (current nominal amount/1). Net debt/total assets of the issuer not to exceed 0.6; net debt/EBITDA of Construtora OAS not to exceed 3.0x; cash to debt service/financial result of the issuer not to exceed 1.2x. 1. 2. 3. 4. 5. 6. 7. 8. Bankruptcy, dissolution, request of extra judicial recovery, or self-bankruptcy not eliminated within 30 days, decree of bankruptcy or similar of the issuer, guarantor, OAS Investimentos S.A., or INVEPAR; Noncompliance, by the issuer of any financial obligation established by the debenture deed not solved within three working days; Noncompliance by the issuer any nonfinancial obligation established by the debenture deed, not solved within 10 days; Noncompliance with the obligation of use of the debenture funds exclusively for development or acquisition of projects considered eligible in accordance with the terms established for this debenture issue; Delinquency by the issuer or by the guarantor of financial obligation of amount equal or above BRL20 million, or equivalent in other currency, unless proven illegitimate, solved, legally contested; Noncompliance, within 30 days, of any judicial decision against the issuer or the guarantor of amount above BRL20 million, or equivalent in other currency; Protests against the issuer or the guarantor of amount above BRL20 million, unless proved to be illegitimate or legally contested; Nonrenewal, cancellation, or suspension of authorizations and licenses, including environmental resulting in adverse effect for the continuation of activities of the issuer or guarantor.
Financial Covenants Financial Covenant Other Relevant Early Maturity Events
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Corporates
Debt and Covenant Synopsis Fifth Debenture Issued by OAS S.A. (Continued)
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Principal Repayment (Date/% of Total) OAS S.A. Construtora OAS Ltda. April 15, 2012 Debenture Deed: May 17, 2012 May 15, 2015 Fifth Debenture Simple, Not Convertible BRL209 million Dec. 15, 2013 (5.5556%); Jan. 15, 2014 (5.5556%); Feb. 15, 2014 (5.5556%); March 15, 2014 (5.5556%); April 15, 2014 (5.5556%); May 15, 2014 (5.5556%); June 15, 2014 (5.5556%); July 15, 2014 (5.5556%); Aug. 15, 2014 (5.5556%); Sept. 15, 2014 (5.5556%); Oct. 15, 2014 (5.5556%); Nov. 15, 2014 (5.5556%); Dec. 15, 2014 (5.5556%); Jan. 15, 2015 (5.5556%); Feb. 15, 2015 (5.5556%); March 15, 2015 (5.5556%); April 15, 2015 (5.5556%); May 15, 2015 (5.5548%). Net debt/EBITDA of Construtora OAS not to exceed 3.0x on annual consolidated financial statements. Net debt/total assets of the issuer not to exceed 60%. 1. 2. 3. 4.
Financial Covenants Financial Covenant Other Relevant Early Maturity Events
Bankruptcy, dissolution, request of self-bankruptcy, decree of bankruptcy or similar of the issuer or guarantor; Noncompliance, by the issuer of any financial obligation established by the debenture deed; Noncompliance by the issuer of any nonfinancial obligation established by the debenture deed; Noncompliance with the obligation of use of the debenture funds exclusively for debt repayment in accordance with the terms established for this debenture issue; 5. Delinquency by the issuer or by the guarantor of financial obligation of amount equal or above BRL20 million, or equivalent in other currency, unless proven illegitimate or solved or legally contested; 6. Noncompliance of any judicial decision against the issuer or the guarantor of amount above BRL20 million, or equivalent in other currency; 7. Protests against the issuer or the guarantor of amount above BRL20 million, unless proved to be illegitimate or legally contested; 8. Capital reduction of the issuer or the guarantor above 10% of equity, unless previously authorized by the debenture holders; 9. Nonrenewal, cancellation, or suspension of authorizations and licenses, including environmental resulting in adverse effect for the continuation of activities of the issuer. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: OAS S.A. and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis First Debenture Issued by OAS Empreendimentos S.A.
Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Real Guarantees Principal Repayment (Date/% of Total) Other Relevant Early Maturity Events First Debenture Issued by OAS Empreendimentos S.A. OAS S.A. Nov. 3, 2010 Debenture Deed: Nov. 3, 2009 Nov. 3, 2014 First Debenture Simple, Not Convertible BRL300 Million Fiduciary lien on shares of single-purposes companies (SPCs) constituted for real estate projects eligible for the transaction and on financial assets related to the debentures; mortgage of real estate assets acquired with the debenture funds; fiduciary assignment of credit rights represented by eligible receivables and funds as per the terms of the debenture deed. Nov. 3, 2012 (20%); May 3, 2013 (20%); Nov. 3, 2013 (20%); May 3, 2014 (20%); Nov. 3, 2014 (20%). 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Bankruptcy, dissolution, request of self-bankruptcy not eliminated within 60 days, decree of bankruptcy or similar of the issuer, guarantor, or any relevant subsidiary; Request of extra judicial recovery by the issuer, guarantor or any relevant subsidiary; Disposal, providing of guarantee to third party of any asset linked to the real guarantee agreement without previous agreement from the debenture holders, unless associated to obligation from judicial determination; Noncompliance, by the issuer, guarantor, or relevant subsidiary of any financial obligation established by the debenture deed not solved within two working days; Noncompliance by the issuer or relevant subsidiary of any nonfinancial obligation established by the debenture deed, not solved within 30 days; Noncompliance with the obligation of use of the debenture funds exclusively for development or acquisition of projects considered eligible in accordance with the terms established for this debenture issue; Delinquency by the issuer or by any relevant subsidiary of financial obligation of amount equal or above BRL5 million, or equivalent in other currency, unless proven illegitimate or solved or legally contested within 30 days; Delinquency by the guarantor of any debt or financial obligation of amount equal or above BRL15 million, or equivalent in other currency, unless solved or legally contested within 30 days; Noncompliance, within 30 days, of any judicial decision against the issuer or any relevant subsidiary of amount above BRL5 million, or equivalent in other currency; Protests against the issuer or relevant subsidiary not solved or declared nonlegitimate within 30 days, of amount above BRL5 million, unless proved to be illegitimate or legally contested; Split, merger, or incorporation or any form of corporate reorganization of the issuer since such operations imply the disposal of relevant assets, without agreement from the debenture holders; Change of activity of the issuer with core business no longer being civil construction and real estate development; Capital reduction of the issuer above BRL5 million, unless previously authorized by the debenture holders; Nonrenewal, cancellation, or suspension of authorizations and licenses, including environmental resulting in adverse effect for the continuation of activities of the Issuer or relevant subsidiaries; More than two notches downgrading of the original national scale BBB risk classification in November 2009, unless the issuer presents within 30 days new guarantees subject to approval by the debenture holders in a way as to maintain a risk classification equivalent to BB+ on the national scale, which, if not obtained, the issuer will have additional 30 days to the redemption and cancellation of the total debenture issue; Sale of the direct or indirect shareholding control of the issuer or the single-purpose companies, which form part of the real guarantees of the debenture issue without previous authorization from the debenture holders.
16.
Continued on the next page. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: OAS Empreendimentos and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis Second Debenture Issued by OAS Empreendimentos S.A. (Continued)
(Foreign Currency Notes) Overview Issuer Guarantors Issue Date Documents Date Maturity Date Description of Debt Amount Principal Repayment (Date/% of Total) Financial Covenants Issuer Financial Covenant Second Debenture Issued by OAS Empreendimentos S.A. OAS S.A. June 15, 2010 Debenture Deed: June 15, 2010 July 15, 2014 Second Debenture Simple, Not Convertible BRL60 million July 15, 2012 (20%); Jan. 15, 2013 (20%); July 15, 2013 (20%); Jan. 15, 2014 (20%); July 15, 2014 (20%). Net debt (*)/Equity equal or lower than 1.0x on half-yearly consolidated financial statements. (*) Net debt excludes financings from the Housing Financial System (SFH) and financings with funds from the Brazilian Savings and Loan System (SBPE) and from the Brazilian Employees Severance Indemnity Fund (FGTS), as well as cash and equivalents. 1. 2. 3. 4. 5. 6. 7. 8. Incorporation, merger, split or any form of corporate reorganization or disposal of relevant assets, unless previously approved by the majority of debenture holders in the market, with the exception of corporate reorganization without change of the current indirect controlling shareholders of the issuer; Noncompliance with obligations related to government fiscal environmental authorities during the issue period; Request of self-bankruptcy or bankruptcy not cancelled within 60 days; decree of bankruptcy, request of judicial or extrajudicial recovery, or any similar procedure; Nonpayment of principal, remuneration, or any financial obligation of the debentures on the due dates; Reduction above 10% of the issuers capital, unless previously authorized by majority in debenture holders meeting; Early maturity of any financial obligation of at least BRL5 million; Delinquency of payment of any issuers debt of, at least BRL5 million, unless illegitimate and since proved by the issuer or legally contested. Downgrading of national scale risk classification of the debenture issue to below BBB, unless the issuer, within 30 days, offers guarantees subject to the approval of debenture holders in a way that the risk classification of the debenture issue is maintained equivalent to BBB.
Other Relevant Early Maturity Events
N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: OAS Empreendimentos and Fitch Ratings.
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Financial Summary OAS S.A.
(BRL Mil., As of Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income N.A. Not available. Source: Fitch. LTM 12/31/11 385,217 385,217 8.3 8.3 18.8 (6.6) 7.8 3.0 1.4 1.4 0.3 0.3 3.0 (0.0) 1.2 (0.9) 4.5 9.7 5.9 9.7 5.9 0.1 N.A. 0.3 7,106,914 1,464,995 967,649 2,785,136 3,752,785 3,752,785 3,752,785 691,261 4,444,046 554,759 (683,404) (128,645) N.A. (148,253) (30,146) (307,044) (349,746) (87,416) 962,659 64,322 N.A. 282,775 4,637,514 3 276,507 278,898 N.A. 53,225 2010 178,990 178,990 4.0 4.0 3.9 (6.9) (16.7) 0.8 1.1 1.1 0.2 0.2 0.8 (0.2) 1.2 (1.4) 20.6 14.6 8.1 14.6 8.1 0.1 N.A. 0.3 4,987,003 1,162,565 661,953 1,957,558 2,619,511 2,619,511 2,619,511 666,486 3,285,997 (32,883) (149,871) (182,754) N.A. (127,659) (310,413) (755,027) (80,899) 1,425,533 299,793 (9,422) 569,565 4,517,154 19 72,217 159,967 N.A. (112,650) 2009 203,512 203,512 5.4 5.4 26.6 (6.0) 28.2 6.8 2.7 2.7 0.5 0.5 6.8 (0.4) 1.3 (0.8) 2.4 6.2 2.8 6.2 2.8 0.1 N.A. 0.3 3,002,987 681,570 322,153 929,494 1,251,647 1,251,647 1,251,647 681,652 1,933,299 438,528 (520,508) (81,980) N.A. (108,811) (36,260) (227,051) N.A. (222,136) 719,116 84,035 (813) 353,151 3,801,666 43 132,690 75,136 N.A. 186,599 2008 179,807 179,807 6.8 6.8 9.1 0.6 (1.7) 2.4 3.4 3.4 0.6 0.6 2.4 0.2 1.5 2.5 5.8 4.0 2.0 4.0 2.0 0.1 N.A. 0.3 1,964,258 370,043 242,210 481,395 723,605 723,605 723,605 641,537 1,365,142 71,425 86,955 158,380 N.A. (62,967) (79,365) 16,048 N.A. (3,959) 108,763 N.A. 2,747 123,599 2,658,419 71 115,817 52,731 N.A. (10,859) 2007 115,152 115,152 7.4 7.4 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 4.9 2.7 4.9 2.7 N.A. 0.1 1,761,499 246,949 44,875 515,545 560,420 560,420 560,420 671,789 1,232,209 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 1,554,648 N.A. 62,404 N.A. N.A. 32,489
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OGX Petroleo e Gas Participaes S.A. (OGX)
B B/RR4
Ratings
Foreign Currency Long-Term IDR Sr. Unsecured Notes due 2018 Local Currency Long-Term IDR National Long-Term Rating IDR Issuer default rating. B
High Expected Leveraged and Negative Cash Flow: OGX Petroleo e Gas Participaes S.A.s (OGX) ratings are constrained by its high leverage and the risk associated with being a startup. As of June 30, 2012, OGX had USD2.9 billion of cash and its pro forma debt was USD3.9 billion. As a startup, the company is not generating positive EBITDA. Lower than Expected Production Volumes Prolong Deleveraging: OGXs production volumes are expected to be significantly lower than initially projected, which prolongs the expected negative free cash flow and delays the deleveraging process. OGX forecasts a production volume of 5,000 barrels of oil equivalent per day (boepd) for its first two wells in Tubarao Azul field, which is well below the 10,00013,000 boepd initially projected. As a result, OGXs production is expected to be below one-half of the initially projected volumes of 730,000 boepd by 2016. Reduction in EBITDA and Capex Projections: As a result of lower production volume prospects, Fitch Ratings has reduced its EBITDA projection to approximately USD2 billion by 2015 from approximately USD6 billion, using Fitchs published midcycle price deck. The company has also reduced its capital investments to approximately USD3.3 billion in 2012 and 2013, and to less than USD1 billion from 2014 onwards. Should production volumes materialize at the new indicated levels, Fitch expects OGX to report negative free cash flow over the next three years. Cash deficits are expected to be funded with current liquidity with no material increases in debt levels. By 2015, Fitch expects leverage to decline to below 4.0x, as production comes on line and operating cash flow increases. Large Contingent and Prospective Resources; No Proven Reserves: OGX estimates it has a potential portfolio of approximately 10.8 billion of recoverable barrels of oil equivalent (boe) as of December 2010. The oil is located mainly in shallow waters or onshore in Brazil, and to a lesser extent in Colombia. Experienced, Knowledgeable Management: The management team is experienced in the oil and gas sector, with an average of 31 years of experience in the Brazilian oil and gas industry. This experience and firsthand knowledge somewhat lowers uncertainty regarding the ability to execute its production plans.
BBB(bra)
Ratings Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR National Long-Term Rating Stable Stable Stable Stable
Financial Data
OGX Petroleo e Gas Participaes S.A. (USD Mil.) Total Equity Total Debt Cash and Equivalents Operating Revenue Net Income ROAE (%) LTM 6/30/12 4,159 4,015 2,957 (695) 12/30/11 4,760 2,567 2,929 (305)

Analysts
Ana Paula Ares +54 11 5235-8121 ana.ares@fitchratings.com Lucas Aristizabal +312-368-3260 lucas.aristizabal@fitchratings.com
Key Rating Drivers: Catalysts for a negative rating action include a significant delay in bringing production online, coupled with lower than expected discovery levels and incorporating reserves, which could result in increased funding needs and a deterioration in OGXs credit quality. A positive rating action could result from satisfactory production volumes, coupled with lower uncertainties regarding reserves.
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Corporates
Recovery Rating
The recovery ratings for OGXs capital market debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery, constrained by the soft cap of RR4 for bonds issued by Brazilian corporates. Using Fitchs notching methodology, bondholder recovery value was assessed using the liquidation value of reserves, in line with Fitchs sector-specific rating recovery methodology for oil and gas, detailed in the special report, U.S. Exploration and Production Recovery Rating Methodology, published March 20, 2008. Under this scenario, Fitch used a USD10/boe reserve value for the companys prospective resources. Fitch has considered, for the purpose of the recovery analysis, potential proved reserves equivalent to 1 billion barrels of oil equivalent given that the company is in its developmental phase and there are no proven certified reserves up to date. This translates into a gross liquidation value of USD10 billion prior to administrative claims and concession payments to junior claimants. The 1 billion boe of potential reserves represents approximately 10% of OGX estimated prospective resources of 10.8 billion boe as of December 2010.
Recovery Analysis OGX Petroleo e Gas Participaes S.A. (OGX)

(Mil.) IDR: B Liquidation Value Cash Accounts Receivable Inventory Value of 1P Oil Reserves Total Advance Available to Rate (%) Creditors 0 80 50 100 10,000 10,000 Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien Value Recovered Recovery (%) Recovery Rating Notching Rating 10,000 10,000
10,000 1000 9,000
9,000 9,000 450 8,550
The amount of concession payments is highly dependent on circumstances, but Fitch typically allows up to 5% of the recovery value available to senior unsecured creditors to be allocated to concession payments. Concession payments allocated to subordinated debt should never result in higher recoveries than those of senior unsecured debt. Recovery (%) 100 Concession Allocation (%) 100 Recovery Rating RR4
Lien 4,015
Notching 0
Rating B
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Corporates
Debt and Covenant Synopsis OGX Petroleo e Gas Participaes S.A. (OGX)
(Foreign Currency Notes)
Overview Issuer Guarantors Document Date Maturity Date Description of Debt
OGX Austria GmbH

OGX and OGX Petroleo e Gas Ltda. May 26, 2011 2018
OGX Austria GmbH

OGX and OGX Petroleo e Gas Ltda. March 27, 2012 2022
Senior Unsecured Notes
Senior Unsecured Notes
Financial Covenants Consolidated Leverage Net debt to EBITDA equal or lower than 3.5x or total debt higher (Maximum) than USD4 billion. Interest Coverage (Minimum) N.A. Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction
Net debt to EBITDA equal or lower than 3.5x or total debt higher than USD4 billion. N.A.
Change of control clause at 101% of principal plus accrued and unpaid interest. The issuer and its restricted subsidiaries cannot sell assets unless the asset sale is for fair market value and at least 75% is paid in cash (some exceptions are contemplated). If, following 365 days upon receipt, proceeds from asset sales have not been applied to purchase the notes or repay debt, proceeds of less than USD50 million will be accumulated or proceeds equal or in excess of such amount will be applied to make an offer to purchase the notes at 100% of principal plus accrued interest.
Change of control clause at 101% of principal plus accrued and unpaid interest. The issuer and its restricted subsidiaries cannot sell assets unless the asset sale is for fair market value and at least 75% is paid in cash (some exceptions are contemplated). If, following 365 days upon receipt, proceeds from asset sales have not been applied to purchase the notes or repay debt, proceeds of less than USD50 million will be accumulated or proceeds equal or in excess of such amount will be applied to make an offer to purchase the notes at 100% of principal plus accrued interest.
Limitation on Secured Debt
Restricted Payments
The issuer and restricted subsidiaries may incur permitted debt, subject to standard limitations, provided that following such transaction total net debt does not exceed USD4 billion and net debt to EBITDA does not exceed 3.5x. The issuer and its restricted subsidiaries are allowed to incur customary permitted liens, related to the normal course of business. These include a debt not to exceed the greater of USD1.5 billion and 15% of consolidated assets. The issuer and its restricted subsidiaries are allowed to make restricted payments if, among other things: no event of default occurs or is continuing, the issuer could incur in additional debt after such transaction, total restricted payments since the notes issuance do not exceed a certain amount, and the restricted payment does not exceed the greater of USD300 million and 3% of consolidated assets. Dividend payments are limited to 25% of consolidated net income and the minimum legally required dividend.
The issuer and restricted subsidiaries may incur permitted debt, subject to standard limitations, provided that following such transaction total net debt does not exceed USD4 billion and net debt to EBITDA does not exceed 3.5x. The issuer and its restricted subsidiaries are allowed to incur customary permitted liens, related to the normal course of business. These include a debt not to exceed the greater of USD1.5 billion and 15% of consolidated assets. The issuer and its restricted subsidiaries are allowed to make restricted payments if, amongst other things: no event of default occurs or is continuing, the issuer could incur in additional debt after such transaction, and total restricted payments since the notes issuance do not exceed a certain amount. Dividend payments are limited to 25% of consolidated net income and the minimum legally required dividend.
Restriction on Purchase of Notes
Default by the company or significant subsidiary on principal or interest of USD100 million or more, acceleration of a debt prior to its maturity in the same amount. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. On or after June 1, 2015, the issuer may elect to redeem the notes in whole or in part at the following prices, expressed as a percentage of nominal value: 2015: 104,25%, 2016:102,125%, 2017 and thereafter 100%. Before June 1, 2015, the issuer may also redeem the notes in whole or in part based on a make-whole premium plus accrued and unpaid interest. The redemption price will equal 100% of principal amount plus the greater of: 1) 1% of the outstanding amount of the notes and 2) the excess of the present value of the redemption Price at 2015 over the outstanding principal amount of the notes. Any redemption of the notes will be subject to either (1) there being at least USD150 million in aggregate principal amount of notes outstanding after such redemption or (2) the issuer redeeming all the then outstanding principal amount of the notes. In the event of changes in the withholding taxes laws, the issuer may redeem the outstanding notes in whole, but not in part, at 100% of the principal amount thereof plus accrued and unpaid interest to the redemption date.
Default by the company or significant subsidiary on principal or interest of USD75 million or more, acceleration of a debt prior to its maturity in the same amount. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. On or after April 1, 2017, the issuer may elect to redeem the notes in whole or in part at the following prices, expressed as percentage of nominal value: 2017: 104.188%, 2018:102,792%, 2019: 101,396, 2020 and thereafter 100%. Before April 1, 2017, the issuer may also redeem the notes in whole or in part based on a make-whole premium plus accrued and unpaid interest. The redemption Price will equal 100% of principal amount plus the greater of: 1) 1% of the outstanding amount of the notes and 2) the excess of the present value of the redemption Price at 2017 over the outstanding principal amount of the notes. Any redemption of the notes will be subject to either (1) there being at least USD150 million in aggregate principal amount of notes outstanding after such redemption or (2) the issuer redeeming all the then outstanding principal amount of the notes. In the event of changes in the withholding taxes laws, the issuer may redeem the outstanding notes in whole, but not in part, at 100% of the principal amount thereof plus accrued and unpaid interest to the redemption date.
N.A. Not applicable. Continued on next page. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis OGX Petroleo e Gas Participaes S.A. (OGX) (Continued)
(Foreign Currency Notes)
Other (Continued) Transactions with Affiliates Limits on Consolidations or Mergers
Transactions between issuer and affiliates for over USD20 million require the delivery of an Officers certificate to the trustee. Those above USD40 million require approval by the majority of the board of directors. Restrictions on merger or consolidation of issuer and subsidiaries. Exceptions require that the surviving entity will be a corporation existing under the laws of certain countries; it expressly assumes the obligations of the company, no vent of default occurs or is continuing, the companys pro forma debt levels allow it to incur in additional indebtedness. OGX and its restricted subsidiaries may consolidate with, merge into or transfer all or part of its properties and assets within themselves.
Mandatory Redemption Substitution of the Issuer
Transactions between issuer and affiliates for over USD20 million require the delivery of an Officers certificate to the trustee. Those above USD40 million require approval by the majority of the board of directors. Restrictions on merger or consolidation of issuer and subsidiaries. Exceptions require that the surviving entity will be a corporation existing under the laws of certain countries; it expressly assumes the obligations of the company, no vent of default occurs or is continuing, the companys pro forma debt levels allow it to incur in additional indebtedness. OGX and its restricted subsidiaries may consolidate with, merge into or transfer all or part of its properties and assets within themselves. The notes will be redeemed if the issuer or affiliates sell assets in excess The notes will be redeemed if the issuer or affiliates sell assets in excess of USD50 million. of USD50 million. The issuer may, without the consent of the holders of the notes, be The issuer may, without the consent of the holders of the notes, be replaced and substituted by any guarantor or any wholly-owned replaced and substituted by any guarantor or any wholly owned subsidiary of a guarantor as principal debtor in respect of the notes. subsidiary of a guarantor as principal debtor in respect of the notes.
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Corporates
Financial Summary OGX Petroleo e Gas Participaes S.A. (OGX)
(USD Mil., Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 (505) (505) 0.9 (13.9) 0.4 (2.5) (2.5) (2.1) (2.1) 0.4 (9.3) 2.9 (0.0) 48.6 (7.9) (2.1) (7.9) (2.1) 0.1 0.0 8,538 2,957 43 3,971 4,015 4,015 0 4,015 4,159 8,174 (116) 12 (104) 0 (2,350) 0 (2,454) 0 516 1,395 6 322 (217) 0 (514) 199 0 (695) 2011 (432) (432) (1.5) (5.9) (1.1) (3.7) (3.7) (3.3) (3.3) (1.1) (17.3) 5.3 (0.2) (20.7) (5.9) 0.8 (5.9) 0.8 0.1 0.0 7,701 2,929 12 2,556 2,567 2,567 0 2,567 4,760 7,327 (242) (137) (379) 0 (1,979) 0 (2,358) 0 415 2,365 2 344 768 0 (438) 118 0 (305) 2010 (234) (234) (2.4) (1.3) (1.7) (1.7) (10.8) 7.9 (0.2) (1.1) (0.6) 10.3 (0.6) 10.3 0.0 0.9 6,017 2,555 136 7 143 143 0 143 5,566 5,709 (127) (96) (223) 0 (1,253) 0 (1,476) 0 19 0 0 4 (1,452) 0 (237) 0 0 (70) 2009 (162) (162) 3.1 (1.9) 292.0 (323.0) (323.0) (0.9) (0.9) 292.0 (0.8) 23.6 0.5 1.2 (1.1) 25.0 (1.1) 25.0 0.0 1.0 5,600 4,206 173 173 173 0 173 5,267 5,440 146 (34) 112 0 (243) 0 (132) 0 (58) 0 0 0 (189) 0 (164) 1 0 (51)
184
Corporates
Pan American Energy LLC (PAE)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating B+ BB/RR3 BB AAA(arg)
Key Rating Drivers

Strong Business Position: Pan American Energy LLC (PAE) has a strong business position in the Argentine market and its credit metrics are expected to remain strong. Ownership by a strong parent, reliable cash flow generation, and significant levels of exports support PAEs foreign currency issuer default rating (IDR), which is rated one notch above Argentinas country ceiling. PAE is 60% owned by BP (rated A by Fitch). PAEs exports totaled USD2.1 billion in 2011 and favorably compare to its long-term debt maturities. In addition, the company has a track record of meeting payments during stressed sovereign scenarios. High Transfer and Convertibility Risk: Following the publication of Decree No 1722 on Oct. 26, 2011, Pan American Energy Sucursal Argentina (PAME, PAEs Argentine branch) is obliged to repatriate 100% of its export revenues. Prior to this date, oil and gas producers could maintain up to 70% of export proceeds abroad, which provided a shield against transfer and convertibility risk. This change in regulation highlights an increased intervention by the government in the oil and gas sector and the potential for foreign currency controls. This risk is one factor that limits the companys foreign currency IDR to B+. Exposure to Government Interference: The Argentine government has been increasing its interference in the oil and gas sector, as reflected by the recent publication of decree n1277, which includes regulations related to investment levels in the oil and gas sector and domestic price references. The Secretary of Energy has reestablished, with certain modifications, the oil plus regime suspended in February 2012. This regime provides certain tax benefits for oil producers that increase production and reserves replacement levels. Due to the uncertainties regarding the magnitude and timing of such benefits, Fitch has excluded such benefits from its pro forma analysis. Large Reserves Base: As of December 2011, PAE had oil and gas reserves of 1.4 billion barrels of oil equivalent (boe), equivalent to 15.9 years of production (23 years for oil, 8.6 years for natural gas). The company has historically increased reserves and production volumes sustainably, despite operating under a challenging environment. Strong Capital Structure and Good Operating Performance: PAEs leverage is low at approximately USD1.40 of debt per barrel of proved reserves as of March 2012. The company maintained a strong operating performance during the past year despite domestic price caps and a double-digit inflation rate. For the 12 months ended March 2012, EBITDA was USD1.6 billion, sufficient to cover its USD1.0 billion capex. In the second half of 2012, EBITDA is expected to be negatively affected by the seize of PAEs main producing field, Cerro Dragon, by some workers in June 2012.
Rating Outlooks
Long-Term Foreign Currency IDR RWN Long-Term Local Currency IDR Stable National Long-Term Rating Stable RWN Rating Watch Negative.

Analysts
Downgrade Triggers: Catalysts for a negative rating action include a material increase in the governments interference in the sector, and a significant increase in debt levels without the associated revenue increase. Upgrade Triggers: A positive rating action seems unlikely due to the business environment in Argentina and the fact that PAE is rated one notch above the country ceiling.
185
Corporates
Recovery Rating
Using Fitchs recovery rating methodology, bondholder recovery value was assessed using the liquidation value of reserves, in line with Fitchs sector-specific rating recovery methodology for oil and gas, detailed in the special report U.S. Exploration and Production Recovery Rating Methodology, published March 20, 2008. Under this scenario, Fitch used a USD10/boe reserve value for the companys proved reserves (1P). Due to existing price caps on natural gas, the Fitch-calculated recover analysis conservatively considers PAEs oil reserves, which produced USD9.6 billion in gross liquidation value prior to administrative claims and concession payments to junior claimants. The model assumes a standard 10% administrative claims adjustment and 5% concession to junior claimants. PAEs senior unsecured notes qualify for an RR3 (+1 notching) relative to the IDR, so the senior unsecured rating is notched one level above the IDR. The recovery rating for PAEs debt instrument reflects Fitchs expectation that the companys creditors would have extremely high recovery expectations under normal circumstances levels consistent with an RR1. The ratings were capped at RR3, which is one notch above the soft cap of RR4 for bonds issued by corporates domiciled in Argentina, which resulted in an issue rating of BB/RR4.
Recovery Analysis Pan American Energy LLC (PAE)

(USD Mil.) IDR: B+ Liquidation Value Cash Accounts Receivable Inventory Value of 1P Oil Reserves Total Advance Available to Rate (%) Creditors 0 80 50 100 9,630.0 9,630.0 Going Concern Enterprise Value LTM EBITDA as of March 31, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims 0 0 9,630.0 9,630.0
9,630.0 963.0 8,667.0
8,667.0 8,667.0 433.4 8,233.7 Value Recovered 1,923.0 Recovery (%) 100 Concession Allocation (%) 100 Recovery Rating RR3
Unsecured Priority Senior Unsecured Source: Fitch.
Lien 1,923.0
Notching +1
Rating BB
186
Corporates
Organizational Structure Pan American Energy LLC
Bridas Energy Holdings Ltd. 50% BP plc 60% Bridas Corporation 40%
CNOOC International Ltd. 50%
Pan American Energy LLC (Delaware) 1Q12 LTM EBITDA: USD1.6 Billion 1Q12 Consolidated Debt: USD 0.9 Billion TD/EBITDA (x): 1.2
100%
90% Pan American Energy Holding Ltd.
100%
100%
Pan American Energy LLC Sucursal Argentina 1Q12 LTM EBITDA: USD1.2 Billion 1Q12 Consolidated Debt: USD1.9 Billion TD/EBITDA (x): 1.5 90%
Pan American Energy Chile Limitada
PAE E&P Bolivia Limited
1Q12: EBITDA xx 90% Million

Pan American Sur S.A.
Pan American Fueguina S.A.
TD Total debt. Source: Pan American Energy LLC and Fitch.
187
Corporates
Debt and Covenant Synopsis Pan American Energy LLC (PAE)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Pan American Energy LLC Sucursal Argentina Pan American Energy LLC April 23, 2010 May 7, 2021 Senior Unsecured Notes Consolidated debt to capitalization is not greater than 45%. EBITA to financial expenses not lower than 2.0x. Change of control clause at 101% of principal plus accrued and unpaid interest. N.A. The issuer and restricted subsidiaries may incur in permitted debt, subject to standard limitations, provided that following such transaction EBITA to financial expenses is not lower than 2.0x and consolidated debt to capitalization is not greater than 45%, and no event of default has occurred. The issuer and its restricted subsidiaries are allowed to incur in customary permitted liens, related to the normal course of business. If any event of default occurs and is continuing, the issuer is restricted to make certain payments including dividends. Default by the company or significant subsidiary on principal or interest of USD40 million or more. If any event of default occurs and is continuing the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. At any time the issuer may redeem the notes in whole but not in part at a price equivalent to the higher of 1) 100% of principal and 2) the present value of remaining principal and interest payments. Transactions between issuer and affiliates are permitted should they reflect market conditions and no event of default is occurring. Restrictions on merger or consolidation of issuer and subsidiaries. Exceptions require that the surviving entity expressly assumes the obligations of the company, no event of default occurs or is continuing, the companys pro forma debt levels allow it to incur additional indebtedness, among others. N.A.
Limitation on Secured Debt Restricted Payments Other Cross Default Acceleration Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
Mandatory Redemption N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
188
Corporates
Petroleos de Venezuela, S.A. (PDVSA)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating IDR Issuer default rating. B+ B+/RR4 B+ AAA(ven)
Key Rating Drivers

Linkage to Sovereign: Petroleos de Venezuela, S.A.s (PDVSA) credit quality is inextricably linked to the Venezuelan government. It is a state-owned entity whose royalties and tax payments have historically represented more than 50% of the governments revenues, and it is of strategic importance to the economic and social policies of the country. In 2008, the government changed PDVSAs charter and mission statement to allow it to participate in industries that contribute to the countrys social development, including health care, education, and agriculture. Limited Transparency of Sovereign: The Venezuelan government displays limited transparency in the administration and use of government-managed funds, and in fiscal operations, which poses challenges to accurately assess the stance of fiscal policy and the full financial strength of the sovereign. As a direct by-product of being a state-owned entity, PDVSA displays similar characteristics, which reinforces the linkage of its ratings to the sovereign. Strong Stand-Alone Credit Profile: PDVSA continues to be an important player in the global energy sector. The companys competitive position is strong and supported by its sizeable reported proven hydrocarbon reserves, strategic interests in international downstream assets, and private participation in upstream operations. The company also benefits from a strong balance sheet, which is in line with many of its competitors. These strong credit attributes are consistent with a higher rating category although sovereign-related risks offset the strength of the financial profile and constrain the rating to that of the sovereign. Solid Credit Metrics: PDVSA reported an EBITDA (after royalties and social expenditure which include most oil bartering agreements) and FFO of approximately USD18.7 billion and USD30.9 billion, respectively, as of year-end 2011. Total financial debt as of Dec. 31, 2011 increased to USD34.9 billion from USD24.9 billion as of 2010. The leverage level at 1.9x is low for the rating category, which is limited by the credit quality of the Venezuelan government. Capital expenditures continue to be high, totaling approximately USD77.3 billion over the past five years, which have somewhat offset declining production levels from existing fields. Large Hydrocarbon Reserves: PDVSAs reported hydrocarbon reserves continue to increase, with proven hydrocarbon reserves of 331 billion barrels of oil equivalent (boe) (approximately 89% oil and 11% natural gas) and proven developed hydrocarbon reserves of 20 billion boe as of December 2011, representing a 15-year proven developed reserve life. Venezuela reported oil production of approximately 2.99 million barrels per day (bpd) during 2011. Reported production has declined by approximately 2% per annum on average over the last four years. Various independent reports have estimated that production levels are lower than reported by the company, which adds to risk and is incorporated into the ratings.
Rating Outlooks
Long-Term Foreign Currency IDR Negative Long-Term Local Currency IDR Negative
Financial Data
PDVSA (USD Mil.) Total Equity Total Adjusted Debt Operating Revenue Net Income EBITDA Total Adjusted Debt/EBITDA (x) EBITDA/Interest Expense (x) 12/31/11 73,833 41,635 124,754 4,496 18,684 2.2 5.1 12/31/10 75,314 30,201 94,929 3,164 24,171 1.2 23.8
Analysts
Lucas Aristizabal +1 312 368-3260 lucas.aristizabal@fitchratings.com Ana P. Ares +54 11 5235-8121 ana.ares@fitchratings.com Julio Ugueto +58 212 286-3232 julio.ugueto@fitchratings.com

Key Rating Drivers: Catalysts for an upgrade include an upgrade to Venezuelas sovereign rating, real independence from the government, and a sharp and extended commodity price upturn. Catalysts for a downgrade include a downgrade to Venezuelas ratings, a substantial increase in leverage to finance capital expenditures or government spending, and/or a sharp and extended commodity price downturn.
189
Corporates
Organizational Structure Petroleos de Venezuela, S.A.
Petroleos de Venezuela, S.A.
100% PDVSA Petroleo S.A.
100% Corporacion Venezolana de Petroleo, S.A. (CVP)
100% PDVSA Gas, S.A.
100% PDV Marina, S.A.
100% PDV Holding Inc. 100% 100% Propernyn B.V. (Holland) Propernyn N.V. (Curaao) 100% 100% PDV Europa B.V. (Holland) 50% AB Nynas Petrolum (Sweden) 100% Refineria Isla 50% Hovensa LLC 100% PMI (Aruba) 100% 100% PMI (Panama) 100%
Empresas Mixtas (Light-Medium Crude Oil)
Refineries (CITGO Petroleum Corporation)
Petromar (Aruba)
Empresas Mixtas (Extra Heavy Crude Oil)
Crude and Gas Assets in Venezuela
Distribution Entities
Assets in North America
European and Caribbean Assets
Other Assets Including Trading Companies (Latin America Caribbean)
Source: Fitch and Petroleos de Venezuela, S.A.
190
Corporates
Debt and Covenant Synopsis Petroleos de Venezuela, S.A. (PDVSA)
(Foreign Currency Notes) Overview Issuer Guarantors Documents Date Maturity Date Description of Debt Financial Covenants Consolidated Net Leverage (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Debt Restriction Additional Debt Restriction Limitation on Secured Debt Restricted Payments Other Cross Default Acceleration Petroleos de Venezuela, S.A. (PDVSA) PDVSA Petrleo, S.A. April 4, 2007, Feb., 11, 2011, May 11, 2012 April 12, 2017; April 12, 2027; April 12, 2037; Nov. 2, 2017; May 17, 2035 Senior Unsecured Notes No material provision noted. No material provision noted. Not included in the indentures covenants. No material provision noted. PDVSA is not permitted to issue senior secured debt or to create any lien on any asset, property, or income without providing the same security to the existing notes. No material provision noted. If the issuer or any of its significant subsidiaries defaults on any indebtedness of at least USD100 million. If any event of default occurs and is continuing, the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Events of default include, but are not limited to failure to pay principal, interest of any additional amount on the notes; a default in the observance or performance on any covent and which default continues for a period of 60 days; defaults in any indebtedness or judgments against the issuer or significant subsidiaries of at least USD100 million. The issuer is allowed to redeem the notes in whole or in part at a preset redemption price.
Restriction on Purchase of Notes
Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: PDVSA and Fitch Ratings.
191
Corporates
Financial Summary Petroleos de Venezuela S.A. (PDVSA)
(USD Mil.) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: PDVSA. 2007 28,310 28,310 29.42 29.42 12.02 (12) 11.49 24.39 76.51 76.51 8.72 8.72 24.39 (3) (2.00) 0.32 2.11 0.57 0.39 0.67 0.50 3.87 0.40 0.18 107,672 4,880 2,877 13,129 16,006 16,006 2,998 19,004 56,062 75,066 8,656 (4,482) 4,174 (12,852) (3,037) (11,715) 756 (1,091) 13,093 1,043 96,242 (3) 24,292 370 6,273 2008 21,232 21,232 16.92 16.92 17.75 (4) 14.88 21.30 27.57 27.57 8.60 8.60 21.30 (2) 0.24 0.91 1.27 0.71 0.50 0.98 0.77 4.95 0.11 135,190 4,483 1,698 13,418 15,116 15,116 5,753 20,869 71,513 92,382 15,628 1,077 16,705 (18,413) (2,953) (4,661) 1,242 1,364 (1,772) 5,000 25 1,198 125,499 30.40 16,022 770 9,491 2009 11,065 11,065 14.99 14.99 11.42 (14) 6.02 25.04 23.49 23.49 3.23 3.23 25.04 (3) (1.00) 0.51 2.45 1.94 1.31 2.61 1.98 2.58 0.14 149,570 6,981 2,956 18,489 21,445 21,445 7,479 28,924 74,389 103,313 11,323 (3,428) 7,895 (15,333) (2,948) (10,386) (14) 34 10,361 2,000 503 2,498 73,819 (41) 5,271 471 4,394 2010 24,171 24,171 25.46 25.46 15.55 (2) 4.23 16.15 23.79 23.79 5.23 5.23 16.15 1.09 0.99 1.84 1.03 0.78 1.25 1.00 4.38 0.14 151,765 6,017 3,604 21,346 24,950 24,950 5,251 30,201 75,314 105,515 15,391 (2,748) 12,643 (12,824) (1,803) (1,984) (454) (379) 3,367 (1,514) (964) 94,929 28.60 18,134 1,016 3,164 2011 18,684 18,684 14.98 14.98 29.93 (6) 6.03 9.52 5.14 5.14 3.10 3.10 9.52 (1) 0.72 0.69 1.20 1.87 1.41 2.23 1.77 12.14 0.07 182,154 8,610 2,396 32,496 34,892 34,892 6,743 41,635 73,883 115,518 30,946 (18,554) 12,392 (17,908) (2,357) (7,873) (15) 4,195 6,213 73 2,593 124,754 31.42 11,813 3,633 4,496
192
Corporates
Rede Energia S.A.
Centrais Eltricas do Par S.A. (Celpa) and Centrais Eltricas Matogrossenses S.A. (Cemat)
RD RD(bra) C/RR4 C(bra)
Ratings
Rede Energia S.A. (Rede) Foreign/Local Currency IDR Long-Term National Rating Perpetual Notes USD575 Mil. Debentures due 2015 Celpa Foreign/Local Currency IDR Long-Term National Rating Senior Unsecured Notes Cemat Foreign/Local Currency IDR Long-Term National Rating IDR Issuer default rating. RD Restricted default.
D D(bra) C/RR4
Celpa Under Bankruptcy Protection: The ratings of Centrais Eltricas do Par S.A. (Celpa), a subsidiary of Rede Energia S.A. (Rede), reflect its bankruptcy protection filing on Feb. 28, 2012. The company is discussing alternatives to solve its financial difficulties. Equatorial Energia S.A. (Equatorial), a holding company in the power sector, has announced a proposal for acquiring a controlling stake in Celpa. The transaction is subject to various precedent conditions, including, among others, a recovery plan under terms and conditions acceptable to Equatorial. Redes and Cemats Ratings Affected by Celpa: Redes and Centrais Eltricas Matogrossenses S.A.s (Cemat) already tight liquidity positions were further weakened by Celpas default. Both Rede and Cemat extended the maturity of some of their financial obligations, including some debenture issues, which resulted in a significant change in the original contractual terms. These changes were aimed at avoiding a very likely event of default and led to downgrades of their issuer default ratings (IDRs) to the restricted default (RD) category from C. Difficulties to Meet Debt Service: Rede Energia, the holding company, will be challenged to obtain a sustainable capital structure in the long term. The group, on a consolidated basis, has failed to grow operational cash flow to the expected extent in the last few years and has faced pressure from its sizeable planned investments in the short to medium term. The company depends on dividends from its subsidiaries, which have not been sufficient to meet its debt service. Financial Challenges: Fitch believes that the extension of debt repayment schedules in and of themselves would not be sufficient to improve the groups financial situation. Only restructuring measures, such as a capital injection or the sale of a material amount of assets would place the holding company and the group in a sustainable credit position. Operational Challenges: Although Rede has had increases in energy sales in the last few years, following the growth potential of its concession areas, the group faces serious challenges, including high energy losses, especially for Celpa. Reported losses by this subsidiary are above the standards set by the regulatory agency, negatively affecting its operational cash flow. The third tariff review cycle for the Brazilian energy distribution companies is also a challenge for the group since the new rules should pressure its consolidated operational cash flow.
RD RD(bra)
Financial Data
Rede Energia S.A. Consolidated (BRL Mil.) Net Revenues EBITDA Funds from Operations Total Adjusted Debt Cash and Marketable Securities Total Adjusted Debt/EBITDA (x) Net Adjusted Debt/ EBITDA (x) 6/30/12 12/31/11 8,010 7,782 1,226 1,397 1,119 8,088 446 6.6 6.2 871 8,390 686 6.0 5.5

Analysts
Renata Pinho +55 11 4504-2207 renata.pinho@fitchratings.com Mauro Storino +55 11 4503-2625 mauro.storino@fitchratings.com
Key Rating Drivers: A positive rating action could be driven by restructuring measures, such as a relevant capital injection and/or the sale of assets that allowed the group to reduce debt to a level commensurate with its cash flow generation capacity. In addition to debt reduction, the company would need a more manageable debt amortization schedule to warrant a positive rating action.
193
Corporates
Recovery Rating
Fitch has performed a liquidation analysis for Rede in the event of bankruptcy. It has also estimated the enterprise valuation in the event of financial distress. Under this scenario, a conservative multiple of EBITDA of 5.0x was applied. The bespoke analysis suggests a higher recovery level of RR3 for the unsecured debt. The rating has been capped at RR4, which is the recovery rating cap for Brazilian issuers. The cap reflects concern about the bankruptcy laws and the application of the law. A recovery rating of RR4 indicates that Redes creditors should have average recovery prospects in the range of 31%50% of current principal and related interest in the event of default.
Recovery Analysis Rede Energia S.A.

(BRL Mil.) Available to Creditors 1,464.0 27.0 460.8 1,951.8 Going Concern Enterprise Value June 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 0 80 50 20
1,226.5 0.0 1,226.5 5.0 6,132.5 1,231.8 600.0 1,831.8 6,132.5 613.2 5,519.3
446.0 1,830.0 54.0 2,304.0 4,634.0
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (5%) Value to be Distributed to Senior Unsecured Claims Recovery Rating RR1 Recovery Ratinga RR4
5,690.3 1,818.0 3,872.3 193.6 3,678.6
Distribution of Value Secured Priority Secured Lien 1,911.0 Value Recovered 1,911.0 Value Recovered 3,608 Recovery (%) 100 Concession Allocation (%) 100 Notching +4 Rating N.A.
Lien 6,177.0
Recovery (%) 58
Notching
Rating RD
a The Redes recovery rating has been capped at RR4. RD Restricted default. Source: Fitch Ratings.
194
Corporates
Organizational Structure Rede Energia S.A.
(As of March 31, 2012)
BNDESPAR DENERGE EEVP OUTROS
15.86%
11.79%
68.24%
4.11%
Rede Energia
(Holding) Public Company 100% 100.00% 99.98%
EDEVPa CELPAa
(Public Company) 51.26%
QMRA
(Holding)
REDE POWER
(Holding)
REDECOMb
99.6%
10.11% 39.92%
REDESERVb
99.5%
CEMATa
(Public Company)
TANGARA VALE DO VACARIA

(Cogeneration) 39.77% 60.16% 60.48% (Generation)
61.67%
100.00%
CAIUAa
50.86%
CELTINSa
91.45%
ENERSULa EEBa
98.69%
CNEEa
97.70%
CFLOa
aDistribution. bCommercialization and services. Source: Fitch and Rede Energia S.A.
195
Corporates
Debt and Covenant Synopsis Rede Energia S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amounts Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Total Debt/EBITDA (Maximum) Interest Coverage Ratio (Minimum) Acquisitions/Divestitures Change of Control Provision Limitations on Sales of assets or shares Rede Energia S.A. N.A. April 2, 2007 N.A. Perpetual Bonds USD575 Million (USD400 Million + USD175 Million) Less than 4.0x (The maximum amount of debt that the issuer and its subsidiaries may incur pursuant to this covenant shall not exceed, with respect to any outstanding debt, solely as a result of fluctuations in the exchange rate of currencies.) N.A. N.A. No later than 30 days following a change of control that results in a rating decline, the issuer will make an offer to purchase all outstanding notes at a purchase price equal to 101% of the principal amount plus accrued interest to the date of purchase. The issuer shall not sell, lease, transfer, or otherwise dispose of any direct or indirect interest in the CELPA shares and CELTINS shares unless the following conditions are met: 1) it receives consideration at least equal to the fair market value of the shares and 2) at least 75% of the consideration is in the form of cash or cash equivalents.
Debt Restriction Limitation on Liens N.A. Limitation on Sale and Leaseback Transactions N.A. Dividends and Other Payment Restrictions Limitation on Dividend and Other Rede Energia will not and will not permit any subsidiary to create or permit to exist or become effective any consensual Payments encumbrance or restriction on the ability of any significant subsidiary to 1) pay dividends or make any other distributions on its capital stock to the issuer or any subsidiary; 2) pay any indebtedness owed to the issuer or any subsidiary; 3) make loans or advances to the issuer or any significant subsidiary or 4) transfer any of its properties or assets to the issuer or any significant subsidiary. Others Limitation on Transactions with Affiliates With certain exceptions, the issuer shall not make any payment, or sell, lease, transfer, or dispose of any of its properties or assets or enter into any transaction or contract for the benefit of any affiliate. This covenant does not apply for cash management or other financial management functions. Limitation on Consolidation, Merger, With certain exceptions, the issuer will not consolidate with or merge with or convey, transfer, or lease all or substantially all of its Conveyance, Sale, or Lease assets to any person. Cross Acceleration Cross acceleration of other debt with a USD40 million threshold. N.A. Not applicable. Source: Company and Fitch Ratings.
196
Corporates
Debt and Covenant Synopsis Centrais Eltricas do Par S.A. (Celpa)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Description of Debt Amount Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Acquisitions/Divestitures Limitations on Sales of Assets or Shares Debt Restriction Limitation on Liens Celpa N.A. May 27, 2011 and June 3, 2016 Senior Unsecured Notes USD250 Million 4.0x up to June 30, 2013; 3.75x after June 30, 2013 but prior to June 30, 2014; 3.50x after June 30, 2014 but prior to June 30, 2015; 3.25x thereafter. With certain exceptions, the issuer and its subsidiaries shall not make any asset disposition. With certain exceptions, the issuer will not, and will not permit any of its restricted subsidiaries to issue, assume, or guarantee any debt secured by a lien upon any property or assets without effectively providing that the notes are secured equally and ratably with such debt so long as such debt is so secured. With certain exceptions, the issuer and its subsidiaries will not enter into any sale and leaseback transaction. Upon a restricted payment triggering event, the company will not 1) declare or pay any dividend or similar payments to the direct or indirect holders of its capital stock; 2) purchase, redeem, retire, or acquire any capital stock of the company; 3) purchase, redeem, or acquire prior to scheduled maturity, scheduled repayment, or scheduled sinking fund payment, any subordinated obligations; or 4) make any investment (other than a permitted investment) in any person. With certain exceptions, the issuer or its subsidiaries shall not make any payment, or sell, lease, transfer, or dispose of any of its properties or assets or enter into any transaction or contract for the benefit of any affiliate. With certain exceptions, the issuer will not consolidate with or merge with, or convey, transfer, or lease all or substantially all of its assets to any person. Cross acceleration of other debt with a USD25 million threshold.
Limitation on Sale and Leaseback Transactions Restricted Payments Limitation on Restricted Payments
Others Limitation on Transactions with Affiliates
Limitation on Consolidation, Merger, Conveyance, Sale, or Lease Cross Acceleration N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
197
Corporates
Financial Summary Rede Energia S.A
(BRL Mil., Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. LTM 6/30/12 1,226,466 1,226,466 15.3 15.3 23.7 2.4 (83.3) 1.9 1.0 1.0 0.3 0.3 1.9 0.3 0.4 1.2 3.4 6.1 5.8 6.6 6.2 33 0.5 13,607,688 445,886 3,494,273 4,031,981 7,526,254 7,526,254 562,111 8,088,365 1,813,890 9,902,255 1,118,610 27,636 1,146,246 0 (948,466) (8,280) 189,500 0 3,226 (485,927) 0 (1,558) (294,759) 8,009,871 743,051 1,231,785 0 (755,344) 2011 1,397,418 1,397,418 18.0 18.0 20.2 (3.4) (30.3) 1.7 1.2 1.2 0.3 0.3 1.7 0.2 0.3 0.7 4.0 5.9 5.4 6.0 5.5 15 0.4 12,935,830 686,083 3,603,518 4,628,521 8,232,039 8,232,039 158,358 8,390,397 1,888,645 10,279,042 870,947 (160,291) 710,656 (956,565) (19,008) (264,917) (816) 193,704 (1,551) (73,580) 7,782,422 13 923,636 1,210,388 (688,035) 2010 1,218,147 1,218,147 17.8 17.8 11.3 (14.8) (14.5) 1.3 1.4 1.4 0.4 0.4 1.3 (0.0) 0.2 (0.1) 6.6 6.4 5.7 6.4 5.8 12 0.3 12,640,339 759,663 2,279,537 5,474,600 7,754,137 7,754,137 16,548 7,770,685 2,649,565 10,420,250 277,469 (364,401) (86,932) (849,229) (81,994) (1,018,155) 4,568 728,503 630,794 345,710 6,860,728 20 786,105 898,733 (368,845) 2009 1,190,910 1,190,910 20.7 20.7 13.2 (7.3) 0.3 1.6 1.6 1.6 0.5 0.5 1.6 0.1 0.3 0.4 5.6 5.7 5.3 5.9 5.5 12 0.2 11,532,692 413,953 1,491,413 5,283,803 6,775,216 6,775,216 203,198 6,978,414 2,434,026 9,412,440 483,599 (180,994) 302,605 (699,779) (24,131) (421,305) 1,711 437,596 18,002 5,740,957 44 788,474 758,635 8,282 2008 1,068,963 1,068,963 26.8 26.8 7.6 (28.2) 8.1 1.2 1.7 1.7 0.6 0.6 1.2 (0.3) (0.1) (0.1) 9.7 5.8 5.4 6.6 6.2 11 0.2 11,334,177 395,951 1,288,695 4,913,818 6,202,513 6,202,513 802,906 7,005,419 2,523,006 9,528,425 104,482 (172,704) (68,222) (1,059,006) (1,127,228) (30,596) 118,555 707,736 115,176 (216,357) 3,995,756 21 727,728 620,260 205,338
198
Corporates
Rodopa Industria e Comercio de Alimentos Ltda.
Weak Business Profile: Rodopa Industria e Comercio de Alimentos Ltda. (Rodopa) operates in a very competitive market characterized by volatile earnings and low EBITDA margins. These risks are exacerbated by the companys small operational base and its limited operational flexibility that relies on only four plants in three Brazilian states. The domestic market represents 80% of its revenues. Sanitary restrictions or cattle scarcity also tend to affect Rodopas business more than its larger competitors, which benefit from a more diversified operational base. Weak Cash Flow Generation: Rodopas ratings reflect a weak cash flow generation over the last three years due to high interest costs and large working capital needs. Also, the companys consolidated free cash flow generation was further depressed by its investment program, which is expected to remain at an elevated level over the next three years. As a result, free cash flow is expected to be negative during 2012. Increasing Leverage: Rodopas leverage is moderate but it is expected to increase. Leverage, as measured by total adjusted debt/EBITDAR, was 2.6x as of the LTM ended June 30, 2012, while the companys net adjusted debt/EBITDAR ratio was 2.2x. These metrics are strong for the current rating category. By the end of 2012, net adjusted debt/EBITDAR should rise to close to 2.5x, as the company will use its cash reserves and will further increase debt to finance planned investments and working capital. Tight Liquidity: Rodopas liquidity is limited and refinancing risk is high. As of June 30, 2012, consolidated cash and marketable securities covered only 23% of short-term debt. The ratings assume that the company will be successful in issuing long-term debt, which will be used to refinance a large portion of current short-term debt and provide liquidity for the companys growth plans. Operational Improvement Expected: Fitch expects that Rodopas consolidated EBITDAR will continue to improve, led by increasing sales volumes and declining cattle prices, reflecting an improved cattle cycle in Brazil. The companys EBITDAR has improved significantly over the last three years as a result of increased slaughtering capacity (25% since 2009) and the close of unprofitable operations. The EBITDAR margin also improved as a result of the gains of scale.
Ratings
Foreign and Local Currency Long-Term Issuer Default Rating (IDR) National Long-Term Rating
BBB(bra)
Rating Outlooks
Financial Data
Forte (Consolidated) LTM 6/30/12 889 76 (7) 201 37 2.6 2.2 12/31/11 820 72 1 165 36 2.3 1.8
Net Revenues EBITDAR FFO Total Adjusted Debt Cash and Marketable Securities Total Debt/ EBITDA (x) Net Debt/ EBITDA (x)

Failure to Issue Long-Term Debt: A failure to improve its debt amortization schedule, as expected by Fitch, may lead to a downgrade. Analysts
Gisele Paolino +55 21 4503-2624 gisele.polino@fitchratings.com Viktoria Krane +1 212 908-0367 viktoria.krane@fitchratings.com
Leverage Increase: Increased leverage over and above Fitchs expectations, as a result of operational performance deterioration or unexpected cash outflow. Improved Operations and Capital Structure: The ratings may be positively affected by a sustained improvement in Rodopas business profile, combined with consistent improvements in both liquidity and debt amortization schedule, and the maintenance of conservative leverage.
199
Corporates
Organizational Structure
Bindilatti Family 100% Forte Empreendimentos e Participaes Ltda. 94% 100% Rodopa Indstria Comrcio de Alimentos Ltda. 50% Rodopa Finance Source: Rodopa. Curtume Cassilndia Ltda. Lidera 6%
99%
200
Corporates
Financial Summary Forte Empreendimentos e Participaes
(BRL 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Average Return on Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Rodopa and Fitch. LTM 6/30/12 74,934 76,254 8.4 8.6 2.9 (8.3) 9.7 0.6 4.2 4.0 0.4 0.4 0.6 (0.3) (0.1) (3.2) 16.2 2.6 2.1 2.6 2.2 12 0.8 502,240 37,137 160,259 34,628 194,887 194,887 6,600 201,487 224,847 426,334 (6,836) (44,566) (51,402) 0 (15,858) (6,526) (73,786) 0 0 89,259 0 354 15,827 888,791 (13) 66,651 17,927 1,320 21,135 2011 71,538 72,064 8.7 8.8 3.8 (8.8) 13.6 1.1 5.5 5.3 0.6 0.6 1.1 (0.5) (0.2) (1.3) 11.3 2.3 1.8 2.3 1.8 11 0.6 472,860 35,518 105,995 59,238 165,233 165,233 2,630 167,863 219,879 387,742 1,203 (38,736) (37,533) 0 (27,867) (6,716) (72,116) 0 0 82,460 0 0 10,344 820,295 7 63,718 13,118 526 28,437 2010 29,467 29,989 3.8 3.9 1.6 (5.9) 11.2 0.5 3.6 3.4 0.4 0.4 0.5 (0.5) (0.2) (2.7) 18.4 2.8 2.0 2.8 2.0 17 0.7 358,621 25,174 61,937 20,836 82,773 82,773 2,610 85,383 198,158 283,541 (4,105) (29,220) (33,325) 0 (12,192) 0 (45,517) 0 0 66,739 0 0 21,222 768,195 67 46,018 8,223 522 21,171 2009 24,079 24,614 5.2 5.3 5.5 (1.7) 4.1 2.7 6.3 5.6 1.4 1.4 2.5 (0.2) (0.0) 0.1 1.7 0.7 0.5 0.8 0.6 33 0.8 295,227 3,952 13,235 2,805 16,040 16,040 2,675 18,715 180,839 199,554 6,525 (5,481) 1,044 0 (9,026) 0 (7,982) 0 0 9,110 0 0 1,128 461,108 19,310 3,840 535 7,177 2008 0.7 314,984 2,824 5,076 1,903 6,979 6,979 8,145 15,124 169,051 184,175 0 0
201
Corporates
Financial Summary Rodopa Industria e Comercio de Alimentos Ltda.
(BRL 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Average Return on Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Rodopa and Fitch. LTM 6/30/12 70,972 72,292 8.2 8.4 0.8 (8.6) 13.2 0.1 4.0 3.8 0.4 0.4 0.2 (0.3) (0.1) (3.8) 70.9 2.8 2.3 2.9 2.4 12 0.8 437,690 36,355 159,708 38,061 197,769 197,769 10,560 208,329 177,813 386,142 (16,310) (41,247) (57,557) 0 (15,298) (1,442) (74,297) (396) 1,098 88,709 0 0 15,114 864,554 6 65,039 17,927 1,320 22,105 2011 66,563 67,089 8.3 8.3 1.8 (9.0) 17.6 0.4 5.1 4.9 0.6 0.6 0.5 (0.5) (0.2) (1.6) 27.8 2.6 2.0 2.6 2.1 10 0.6 407,402 34,763 105,903 64,419 170,322 170,322 2,630 172,952 170,593 343,545 (7,418) (36,707) (44,125) 0 (27,232) (1,442) (72,799) (396) 588 82,357 0 0 9,750 806,432 11 61,127 13,118 526 27,713 2010 27,476 27,998 3.8 3.9 2.0 (6.2) 15.6 0.5 3.3 3.2 0.4 0.4 0.5 (0.5) (0.2) (2.6) 20.4 3.4 2.5 3.4 2.5 14 0.7 291,178 25,013 61,933 31,098 93,031 93,031 2,610 95,641 144,322 239,963 (4,057) (28,131) (32,188) 0 (12,290) (529) (45,007) 0 0 66,745 0 0 21,738 726,056 57 46,103 8,223 522 20,938 2009 23,823 24,358 5.2 5.3 4.2 (1.4) 8.0 1.6 6.2 5.6 1.4 1.4 1.5 (0.1) 0.0 (1.3) 4.7 1.2 1.0 1.3 1.1 16 0.5 226,653 3,275 13,226 14,886 28,112 28,112 2,675 30,787 123,913 154,700 2,177 (5,164) (2,987) 0 (2,333) (974) (6,294) 372 0 6,465 0 0 543 462,226 (8) 20,781 3,840 535 8,859 2008 19,194 20,823 3.8 4.2 22.2 1.6 6.4 16.6 12.0 6.5 2.7 2.4 8.7 1.4 1.8 1.8 1.0 1.0 0.9 1.3 1.2 12 0.3 211,353 2,732 5,423 14,403 19,826 19,826 8,145 27,971 98,289 126,260 24,851 (1,479) 23,372 0 (13,079) (2,203) 8,090 0 (500) (6,428) 0 0 1,162 500,706 39 17,816 1,595 1,629 6,148
202
Corporates
SANLUIS Rassini S.A. de C.V.
SANLUIS Rassini
Full Rating Report
Ratings
Foreign Currency Issuer Default Rating Local Currency Issuer Default Rating B B
Key Rating Drivers

Cyclical Industry Affects Financial Profile: SANLUIS Rassini, S.A. de C.V.s (SLR) ratings reflect the cyclicality of the industry, its high customer dependence, as well as the companys history of debt restructurings. The company restructured its debt in 20102011. This was similar to other auto suppliers, as a steep decline in volumes during 20082009 eroded cash generation and increased leverage. Solid Business Position: SLR, a subsidiary of SANLUIS Corporacion, S.A.B. de C.V. (SLC), manufactures suspension and brake system components for light and heavy vehicles and has a leading position in North America and an important presence in Brazil. The positive momentum in the North American market and the stabilization in the Brazilian heavy trucks segment are factors that should benefit the companys cash flow in the near term and should further strengthen its financial profile. Concentration of Operations: SLRs customer base is concentrated. Detroits three original equipment manufacturers (OEMs) represent approximately 60% of total revenues. In 2011, North America represented 62% of total SLC revenues and 59% of its consolidated EBITDA. The companys main product line, leaf springs, accounted for more than 70% of total sales in 2011. Fitch expects these values to remain relatively stable in the next few years. Low-Cost Structure Provides Flexibility: During the latest industry downturn, SLR rationalized its operations and reduced the breakeven point from historical levels. Suspension customers long-term contracts provide raw material pass-through to prices and management has implemented initiatives to maintain plant efficiency and productivity. These actions, in conjunction with volume recovery, have resulted in EBITDA margins between 12%14% during 2010 and the first half of 2012. However, the companys business nature is closely dependent on volumes and industry cyclicality. Moderate Leverage After Debt Restructuring: The companys debt restructuring process, which was completed in 2010, included the rescheduling of the maturity of USD142 million of secured bank loans at the North America Suspension Group level until 2014. In 2011, the group also exchanged USD237 million of the old SANLUIS Co-Inter (SISA) senior notes and mandatory convertible debentures for USD61.5 million of guaranteed notes due 2017, and USD14.5 million of new SISA Notes due 2020 plus 30.4 million of SLC shares. This resulted in a debt reduction to USD260 million from USD420 million. As of June 30, 2012, on a consolidated basis, SLCs total debt-to-EBITDA ratio was 2.7x and its net debt-to-EBITDA ratio was 2.3x.
Rating Outlook
Stable
Financial Data
SANLUIS Corporacion S.A.B. de C.V. (MXN Mil.) Revenue EBITDA EBITDA Margin (%) Total Debt Debt/EBITDA (x) EBITDA/Interest Expense (x) LTM 6/30/12 2011 9,615,513 9,353,398 1,271,994 1,255,488 13.2 13.4 3,542,599 3,500,767 2.8 2.8 3.3 3.4
Analysts
Alberto de los Santos +52 81 8399-9100 alberto.delossantos@fitchratings.com Velia P. Valds +52 81 8399-9100 velia.valdes@fitchratings.com

Operating Pressures Affecting Credit Metrics: Negative rating actions could result from a combination of lower volume sales and profitability as a result of a sharp U.S. recession and/or the loss of customers, which in turn translates to increased leverage above expected levels. Significant and Sustained Improvement in Leverage: Conversely, positive rating actions could be taken if the company consistently maintains leverage levels below 2.5x in conjunction with a strong liquidity profile and positive free cash flow generation.
203
Corporates
Organizational Structure SANLUIS Corporation, S.A.B. de C.V. (USD Mil., As of June 31, 2012)
SANLUIS Corporation, S.A.B. de C.V. Euro Commercial Paper Eurobond 7% Sr. Notes due 2017 Total Debt 100% SANLUIS Co-Inter S.A. (SISA) 7% Notes due 2020 100% SANLUIS Rassini, S.A. de C.V. (SLR) 14.3 5.4 2.3 65.8 73.5
100%
100%
Suspension Group
Brake Group Revolving 21.8
North America Suspension Group RCA due 2014 124.9
100% 51%
Brazil Suspension Group WC Lines Term Loan 2013 19
RCA Restructured credit agreement. Note: Total consolidated debt is USD253.5 million. Source: Company filings, Fitch Ratings.
204
Corporates
Financial Summary SANLUIS Corporation, S.A. de C.V.
(MXN Mil., Fiscal Years End Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Continued on next page. Source: Company filings and Fitch calculations. LTM 6/30/12 1,271,994.0 1,271,994.0 13.23 13.23 23.79 6.05 7.32 2011 1,255,488 1,255,488 13.40 13.40 18.20 2.80 54.80 2010 1,057,592 1,057,592 13.90 13.90 20.60 3.90 29.30 2009 502,823 502,823 9.20 9.20 13.30 (0.80) (22.50) 2008 434,287 434,287 6.20 6.20 5.10 2.60 (27.10)
3.9 3.3 3.3 1.2 1.2 3.9 0.9 1.4 2.8
2.9 3.4 3.4 1.3 1.3 2.9 0.7 1.0 2.3
2.7 2.6 2.6 0.4 0.4 2.7 0.2 0.3 2.9
1.7 1.4 1.4 0.2 0.2 1.7 0.1 0.2 0.7
0.7 1.2 1.2 0.6 0.6 0.7 0.8 1.3 1.9
2.3 2.8 2.4 2.8 2.4 11.8 0.2
3.3 2.8 2.6 2.8 2.6 9.1 0.2
4.1 4.3 4.0 4.3 4.0 10.9 0.6
4.9 6.1 5.7 6.1 5.7 12.0 0.9
12.5 7.2 6.5 7.2 6.5 12.4 0.1
8,940,453 507,245 682,248 2,860,351 3,542,599 3,542,599 0 3,542,599 2,797,306 6,339,905
8,368,745 297,232 577,999 2,922,768 3,500,767 3,500,767 0 3,500,767 2,346,960 5,847,727
7,539,293 259,129 2,574,292 1,926,792 4,501,084 4,501,084 0 4,501,084 778,915 5,279,999
7,129,619 173,171 2,840,659 202,802 3,043,461 3,043,461 0 3,043,461 1,572,536 4,615,997
7,060,969 323,500 324,890 2,817,622 3,142,512 3,142,512 0 3,142,512 1,781,108 4,923,620
1,119,703 (215,339) 904,364 0 (322,993) 0 581,371 0 (53,068) (37,415) 667 (226,535) 265,020
699,063 (224,122) 474,941 0 (210,282) 0 264,659 0 871 (15,639) 667 (212,455) 38,103
677,264 (221,585) 455,679 0 (159,537) 0 296,142 0 11,384 (38,858) 0 (182,710) 85,958
244,775 (135,105) 109,670 0 (152,116) 0 (42,446) 0 26,917 (114,690) 0 (20,110) (150,329)
(106,498) 503,951 397,453 0 (213,548) 0 183,905 0 19,919 (134,367) 0 (64,876) 4,581
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Corporates
Financial Summary SANLUIS Corporation, S.A. de C.V. (Continued)
(MXN Mil., Fiscal Years End Dec. 31) Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company filings and Fitch calculations. LTM 6/30/12 9,615,513 951,604 388,815 0 179,094 2011 9,353,398 22.7 951,221 364,441 0 856,617 2010 7,620,995 39.6 781,814 409,628 0 344,272 2009 5,458,946 (21.5) 282,220 370,117 0 (377,941) 2008 6,957,807 (13.0) 189,468 357,550 0 (536,526)
206
Corporates
Servicios Corporativos Javer, S.A.P.I. de C.V.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR B B+/RR3 B
Key Rating Drivers

High Leverage: Javers total adjusted debt has increased in the past 18 months by 45% to MXN3.8 billion from MXN2.6 billion. The increase primarily reflected the companys large investments during 2011 in working capital, as the company increased the size of its inventories. Positively, Javer has no significant debt payments due during the next two years. Modest Change in FCF in 2012: Javers cash flow has begun to improve following its build-up of working capital during 2011 that resulted in a negative FCF of MXN390 million. During the LTM ended June 30, 2012, Javers FCF was positive MXN125 million. This was a result of slower growth in units, an improvement in the collection process, and more moderate requirements in inventories. Recovery in Margins Expected in the Second Half of 2012: Javers EBITDA margin was 15% during the first half of 2012, which is below its normal average. The decline in margins was due to its product mix being more oriented to the low-income segment in order to take advantage of available subsidies through CONAVI. Margins are expected to improve for the second half of the year, as the company product mix shifts slightly to higher end customers. Sectors Mortgage Origination Remains Stable: INFONAVITs total number of loans granted was 276,856 during the first half of 2012, which represents 57% of INFONAVITs 2012 target. Two factors that could limit the sectors growth during the second half of 2012 are the availability of subsidies, as 72% of the annual target amount was already allocated by CONAVI and FOMHAPO during the first-half 2012, and potential delays in the origination process due to new procedures being implemented (scoring system and credit bureau) by the government agencies for mortgage origination. Large Regional Player with Limited Diversification: Javer is one of the five largest players in the Mexican homebuilding industry with total annual units sold around 18,000 units. The companys operations in the state of Nuevo Leon represent about 75% of its unit sales. This concentration increases Javers dependence upon specific local and municipal governments to secure land and permits. Positively, the company accounts for about 15% of the mortgages granted by Instituto del Fondo Nacional para la Vivienda de los Trabajadores (Infonavit) in Nuevo Leon.
Rating Outlooks
Financial Data
Servicios Corporativos Javer, S.A.P.I. de C.V. (MXN Mil.) Revenue EBITDA EBITDA Margin (%) FCF FCF Margin (%) Cash Short-Term Debt Total Adjusted Debt Total Adjusted Debt/EBITDA (x) Total Adjusted Net Debt/EBITDA (x) 6/30/12 5,394 982 18.2 125 2.3 363 57 3,764 3.8 3.5 12/31/11 4,719 902 19.1 (390) (8.3) 416 108 3,865 4.3 3.8

FCF Generation Is Main Driver: Javers leverage increased significantly in 2011. The Negative Outlook reflects the view that continued high and negative FCF levels similar to the levels reached during 2011 in 2012 would fail to reduce leverage levels to those consistent with the rating category. Weaker liquidity, as reflected by a decreased cash position or higher short-term debt levels, would be seen as negative to credit quality and could also lead to a downgrade. Additional threats to the rating category include a decline in government funding programs or an erosion of the companys market position. Conversely, better operational performance, resulting in the expectation that total adjusted debt to EBITDA would remain below 4.0x over time, could trigger a revision of the Rating Outlook to Stable
Analysts
Jos Vrtiz +1 212 908-0641 jose.vertiz@fitchratings.com Indalecio Riojas +52 81 8399-9108 indalecio.riojas@fitchratings.com
207
Corporates
Recovery Rating
Javers recovery ratings reflect Fitchs belief that under a bankruptcy scenario the companys enterprise value, and hence recovery rates for its creditors, would be maximized through a liquidation scenario rather than a restructuring scenario (as a going concern). Under this scenario, Fitch applies the industrys standard discount rates to the companys cash, accounts receivable, and net PP&E of 0%, 80%, and 20%, respectively. In the case of inventories, the industrys standard discount rate is 55%. However, for this specific case Fitch utilizes 45%, which reflects the fact that approximately 50% of the companys long-term inventories included land from third parties being held through land trust agreements. The B+/RR3 rating assigned to the senior notes reflects good recovery prospects in the range of 50%70% given default.
Recovery Analysis Servicios Corporativos Javer, S.A.P.I. de C.V.

(MXN Mil., As of June 30, 2012) Enterprise Value (As of June 30, 2012) EBITDA EBITDA Discount (%) Distressed EBITDA Market Multiple Enterprise Value Interest Expense Rent Expense Maintenance Capital Expenditures Principal Amortization (Next 12 Months) Distribution of Value by Priority Greater of Enterprise or Liquidation Value Less Administrative Claims Less Concession Payments Adjusted Value Amount Outstanding and Available R/C 3,579 982 40 589 3.5 2,061 3,114 311 0.0 2,802 Credit Ratings B B+ Liquidation Value Cash Accounts Receivable Inventory PP&E, Net Total Balance Recovery Rates (%) 363 0 1,753 80 3,685 45 267 20 6,067 Available to Creditor 1,402 1,658 53 3,114
Issuer Default Rating Senior Unsecured
Recovery Rate (%) 73
RR Rating RR3
Notching 1
Note: According to Fitch Ratings country-specific treatment of recovery ratings, Mexico has a soft cap at RR3, which results in a maximum one-notch benefit over the issuer default rating. Source: Javers financial statements and Fitch Ratings.
208
Corporates
Organizational Structure Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer)
(As of June 30, 2012)
Proyectos del Noreste, S.A. de C.V. Promotora de Proyectos Inmobiliarios Turin, S.A. de C.V. Southern Cross Designees (40.7%), Evercore Designee (10.7%), and Arzentia (8.5%) 60.0%
38.0%
2.0%
Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) USD270 Mil. Senior Notes Due 2021a
99.9% Impulsora de Viviendas Javer S.A. de C.V., SOFOM, E.N.R. 99.9% Casas Javer S.A. de C.V.
99.9% Construccion de Viviendas Javer S.A. de C.V. 99.9% Casas Consentidas Javer, S.A. de C.V., SOFOM E.N.R.
99.9% Servicios Administrativos Javer, S.A. de C.V.
99.9% Urbanizaciones Javer S.A. de C.V.
99.9% Hogares Javer, S.A. de C.V.
aEach
of Javers subsidiaries guarantees the notes jointly and severally on a senior unsecured basis. Source: Javer.
209
Corporates
Debt and Covenant Synopsis Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer)
(Foreign Currency Notes) Overview Issuer Guarantors Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) Payment of principal of, premium, if any, and interest on the notes is guaranteed jointly and severally on a senior unsecured basis by each of the following Javer subsidiaries (Guarantors): Servicios Administrativos Javer, S.A. de C.V.; Casas Javer, S.A. de C.V.; Hogares Javer, S.A. de C.V.; Viviendas Javer, S.A. de C.V.: Construccin de Viviendas Javer, S.A. de C.V.: Urbanizaciones Javer, S.A. de C.V., Impulsora de Viviendas del Noreste, S.A. de C.V.: Impulsora de Viviendas Javer, S.A. de C.V.: SOFOM, E.N.R., Desarrollos Integrales Javer S.A de C.V.; and Casas Consentidas Javer, S.A. de C.V., SOFOM, E.N.R. April 6, 2011 April 6, 2021 Senior Notes USD270 Million The notes and the guarantees rank equally in right of payment with all of the company and the subsidiary guarantors existing and future senior indebtedness; and senior in right of payment to all of the company and the subsidiary guarantors existing and future subordinated indebtedness. The notes and the guarantees will effectively rank junior in right of payment to all of the company and the subsidiary guarantors existing and future secured indebtedness with respect and up to the value of the assets securing such indebtedness. The notes and the guarantees will be structurally subordinated to all indebtedness (including trade payables) of the companys non-guarantor subsidiaries. Furthermore, the notes and the guarantees will rank junior in right of payment to all obligations preferred by statute (such as tax or labor obligations). The company may incur in additional indebtedness if, among other conditions provided in the new indenture, the consolidated fixed coverage ratio is greater than 2.25 to 1.00. Permitted indebtedness includes indebtedness incurred by the company or any subsidiary guarantor under credit facilities (including construction bridge loans and other seller financing) in an aggregate principal amount at any time outstanding not to exceed the greater of USD50.0 million or 10.0% of consolidated tangible assets.
Document Date Maturity Date Description of Debt Amount Ranking
Financial Covenants Limitation on Incurrence of Additional Indebtedness
Acquisitions/Divestitures Change of Control Provision Upon the occurrence of a change of control, the holders of the notes will have the right subject to certain exceptions to require the issuer to repurchase some or all of the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date. In connection with the companys change of control occurred during 2009, the company completed a consent solicitation pursuant to a consent solicitation statement dated Oct. 28, 2009, requesting that holders of the outstanding notes as of a record date waive the change of control provisions of and consent to an amendment to the indenture governing the outstanding notes (together, the Waiver and Amendment). After receiving valid consents from holders of a majority in aggregate principal amount of the outstanding notes, the Waiver and Amendment was affected through the execution of a supplemental indenture, dated as of Nov. 9, 2009, to the indenture. Certain Covenants The indenture contains certain covenants that, among other things, limit the companys ability and the ability of its subsidiaries to: (1) incur additional indebtedness; (2) pay dividends on the companys capital stock or redeem, repurchase, or retire the companys capital stock or subordinated indebtedness; (3) make investments; (4) create liens; (5) create any consensual limitation on the ability of the companys restricted subsidiaries to pay dividends, make loans, or transfer property to the company; (6) engage in transactions with affiliates; (7) sell assets, including capital stock of the companys subsidiaries; and (8) consolidate, merge, or transfer assets. If the notes obtain investmentgrade ratings from the rating agencies and no default has occurred and is continuing, the foregoing covenants will cease to be in effect with the exception of covenants that contain limitations on liens and on, among other things, certain consolidations, mergers, and transfer of assets for so long as each of the foregoing rating agencies maintains its investment grade rating. These covenants are subject to important exceptions and qualifications. Others Limitation on The company will not, and will not permit any of its restricted subsidiaries to, directly or indirectly, enter into any transaction or series of Transactions with Affiliates related transactions (including, without limitation, the purchase, sale, lease, or exchange of any property or the rendering of any service) with, or for the benefit of, any of its affiliates (each an affiliate transaction), unless: (1) the terms of such affiliate transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arms-length basis from a person that is not an affiliate of the company; (2) in the event that such affiliate transaction involves aggregate payments or transfers of property or services with a fair market value, in excess of USD5 million, the terms of such affiliate transaction will be approved by a majority of the members of the board of directors of the company; and (3) in the event that such affiliate transaction involves aggregate payments, or transfers of property or services with a fair market value, in excess of USD15 million, the company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such affiliate transaction to the company and the relevant restricted subsidiary (if any) from a financial point of view from an independent financial advisor and file the same with the trustee. This restriction is subject to important exceptions and qualifications. Limitation on Javer will not, in a single transaction or series of related transactions, consolidate or merge with or into any person (whether or not the Consolidations or Mergers company is the surviving or continuing person), or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the companys properties and assets (determined on a consolidated basis for the company and its restricted subsidiaries), to any person. This restriction is subject to several exceptions. Events of Default The main events of default are: (1) default in the payment when due of the principal of or premium, if any, on any notes, including the failure to make a required payment to purchase notes tendered pursuant to an optional redemption, change of control offer or an asset sale offer; (2) default for 30 days or more in the payment when due of interest, additional amounts or liquidated damages, if any, on any notes; (3) the failure to perform or comply with any of the provisions described under Certain Covenants Merger, Consolidation, and Sale of Assets; and (4) the failure by the company or any restricted subsidiary to comply with any other covenant or agreement contained in the indenture or in the notes for 45 days or more after written notice to the company from the trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes. Continued on next page. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Servicios Corporativos Javer, S.A.P.I. de C.V. and Fitch Ratings.
210
Corporates
Debt and Covenant Synopsis Servicios Corporativos Javer, S.A.P.I. de C.V. (Javer) (Continued)
(Foreign Currency Notes) Others (Continued) Cross Default Acceleration Governing Law Optional Redemption Cross default when an uncured event of default occurs for debt of more than USD15 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. The indenture, the guarantees, and the notes will be governed by the laws of the state of New York. The company may, at its option, at any time on or prior to August 2014, use the net cash proceeds of certain equity offerings to redeem in the aggregate up to 35.0% of the aggregate principal amount of the notes, including any additional notes the company may issue in the future under the indenture, at a redemption price equal to % of the principal amount thereof, provided, that: (1) After giving effect to any such redemption at least 65.0% of the aggregate principal amount of the notes (including any additional notes) issued under the indenture remains outstanding; and (2) the company makes such redemption not more than 90 days after the consummation of such equity offering.
Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Servicios Corporativos Javer, S.A.P.I. de C.V. and Fitch Ratings.
211
Corporates
Financial Summary Servicios Corporativos Javer, S.A.P.I. de C.V.
(MXN 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/ Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports and Fitchs calculations. 2008 1,100,650 1,100,650 24.61 24.61 21.32 (3.00) 47.51 2.28 3.17 3.17 0.92 0.92 2.28 0.19 0.49 (1.00) 3.05 2.20 1.88 2.20 1.88 14.53 0.35 5,138,574 350,041 845,512 1,578,316 2,423,828 2,423,828 2,423,828 1,299,826 3,723,654 446,310 (509,746) (63,436) (53,846) (117,282) (173) 422,371 (9,442) 295,474 4,472,945 45 1,059,915 347,724 510,425 2009 1,090,334 1,090,334 22.11 22.11 22.20 13.63 40.47 2.57 3.33 3.33 1.83 1.83 2.57 1.68 3.03 6.90 3.12 2.41 1.67 2.41 1.67 12.98 0.1 5,205,461 805,927 267,918 2,357,190 2,625,108 2,625,108 2,625,108 1,164,193 3,789,301 513,387 424,774 938,161 (135,960) (130,000) 672,201 410,538 (586,000) (40,853) 455,886 4,931,677 10 1,050,215 327,671 498,634 2010 878,795 878,795 18.80 18.80 19.84 (13.00) 10.45 1.71 2.06 2.06 1.97 1.97 1.71 0.74 (19.00) 3.56 2.96 2.40 2.96 2.40 16.34 0.01 5,876,704 491,939 19,428 2,581,131 2,600,559 2,600,559 2,600,559 1,085,405 3,685,964 304,361 (861,949) (557,588) (28,799) (586,387) (14,208) 333,663 (47,076) (314,008) 4,673,919 (5) 819,208 426,982 117,571 2011 902,227 902,227 19.12 19.12 17.66 (8.00) (2.00) 1.87 1.83 1.83 1.50 1.50 1.87 0.17 0.86 (13.00) 4.19 4.28 3.82 4.28 3.82 15.28 0.03 7,195,147 415,721 108,377 3,756,076.31 3,864,453.31 3,864,453.31 3,864,453.31 1,356,510 5,220,963.31 428,240 (790,972) (362,732) (26,954) (389,686) (58,550) 372,399 (8,461) (84,298) 4,718,574 1 836,621 493,809 (19,637) LTM Ended 6/30/12 981,813 981,813 18.20 18.20 21.15 2.33 (1.00) 2.18 1.95 1.95 1.75 1.75 2.18 1.12 1.77 8.40 3.42 3.83 3.46 3.83 3.46 14.46 0.02 6,668,372 363,226 57,307 3,706,350 3,763,657 3,763,657 3,763,657 1,437,753 5,201,410 595,680 (453,314) 142,366 (16,943) 125,423 (50,387) (87,562) 59,702 47,176 5,394,304 4 918,504 504,555 (7,522)
212
Corporates
Sidetur
Siderurgica del Turbio, S.A.
Full Rating Report
Ratings
Foreign Currency Long-Term Foreign Currency IDR B Long-Term Local Currency IDR B Sidetur Finance B.V. B/RR4 National Long-Term Rating National Short Term Rating IDR Issuer default rating. BB+(ven) F2(ven)
Key Rating Drivers

Ongoing Expropriation Process: Siderurgica del Turbio, S.A.s (Sidetur) ratings reflect the ongoing developments and uncertainty surrounding the expropriation of Sideturs steel mills, in particular the unknown dollar value that it will receive from the Venezuelan government for those assets. The ratings also take into consideration the uncertainty surrounding the timeliness of payment from the government, which could inadvertently lead to the change-ofcontrol clause being triggered. Higher than Average Recoveries: Recovery in the event of default could be above the RR4 level due to Sivensas strong reputation and conservative management, as well as the low level of debt in relation to the amount of funds the company is likely to receive from the government. The recovery was capped at the RR4 level due to concerns about creditor rights in Venezuela, as well as the application and legal enforceability of any claim. Please refer to Fitchs criteria report, Country-Specific Treatment of Recovery Ratings, dated June 15, 2012 for more guidance on Fitchs application of national recovery ratings. Shrinking Volumes Offset by Better Product Mix: Sideturs revenues and EBITDA reduced significantly as a result of lower sales volumes and price controls to USD355 million and USD62 million in fiscal 2011 from USD647 million and USD119 million in fiscal 2009, respectively. For the LTM to March 31, 2012, the companys revenues improved to USD451 million, and EBITDA showed improvement due to better product mix with a higher amount of unregulated rebar products at USD74 million, with an EBITDA margin of 16%. Low Leverage Maintained: In spite of this decline in revenues, the companys leverage remained low with its total-debt-to-LTM EBITDA ratio currently at 1.1x and 0.7x on a net cash basis, as of March 31, 2012. This compares favorably to 2.8x and 1.2x, respectively, in fiscal 2011. Total debt as of the same period was USD80 million compared to USD90 million in fiscal 2010, mainly comprising the outstanding portion of the USD100 million senior unsecured notes issued by Sidetur through its 100% owned subsidiary, Sidetur Finance B.V. in 2006. Minimal Cash Position: Sideturs cash position is at a historical low. Fitch partly attributes this to a change in cash management strategy related to the companys expropriation. The company held USD32 million of cash and marketable securities as of March 31, 2012, a significant reduction on USD149 million held in fiscal 2008. USD7 million of the latest cash position was restricted cash, which guarantees a quote of capital and interest of the bonds. Sidetur has a manageable debt maturity schedule of USD5 million a year until 2016, providing headroom.
Rating Outlooks
Long-Term Foreign Currency IDR Negative Long-Term Local Currency IDR Negative
Financial Data
Sidetur (LTM) Total Equity (USD Mil.) Total Debt (USD Mil.) Operating Revenue (USD Mil.) Net Income (USD Mil.) FCF Margin (%) ROAE (%) Total Debt to EBITDA (x) 3/31/12 137 80 451 47 3.0 35.0 1.1 9/30/11 125 83 355 37 (2.0) 28.0 1.3
Analysts
Jay Djemal +1 312 368-3134 jay.djemal@fitchratings.com Julio Ugueto +58 212 286-3232 julio.ugueto@fitchratings.com

Expropriation of Company Assets: Sideturs ratings are dependent on the unfolding events surrounding the expropriation process. Sideturs ratings incorporate the expectation that the government of Venezuela works to avoid a situation whereby an international default occurs as a result of the nationalization process of Sideturs assets. Sideturs ratings therefore reflect Fitchs current expectation of the unsecured notes at Sidetur Finance B.V. being prepaid.
213
Corporates
Recovery Analysis
Despite Sideturs bespoke recovery analysis indicating a recovery rating of RR1 for Sideturs USD100 million senior unsecured notes of which USD84 million is outstanding. Fitchs Country-Specific Treatment of Recovery Ratings criteria published June 15, 2012 has been used to cap the rating at RR4 despite the bespoke analysis. In this criteria report, Venezuela is categorized as a Group D jurisdiction, which has a soft cap for recovery ratings at RR4.
Recovery Analysis Siderrgica del Turbio, S.A. and Sidetur Finance B.V.
(USD Mil.) Going Concern Enterprise Value March 31, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total
74 50 37 4.0 147
7 5 12
Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Adminstrative Claims (%) Concession Allocation Adjusted Enterprise Value for Claims Distribution of Value Unsecured Priority Senior Unsecured Source: Fitch.
Advance Rate Available to Creditors 147 10 15 5 7 125
Lien 80
Value Recovered 80
Recovery (%) 100
Recovery Rating RR1
Notching +3
Rating BB
214
Corporates
Financial Summary Sidetur
(USD 000, Years Ended Sept. 30) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Sidetur financial statements, Fitch calculations. LTM 3/31/12 73,695 73,695 16 16 24 3 35 40.9 58.3 58.3 11.8 11.8 40.9 2.2 7.3 42.3 1.5 1.1 0.7 1.1 0.7 2.0 0.0 0.1 331,711 31,874 5,000 75,000 80,000 80,000 80,000 137,303 217,303 50,401 (1,643) 48,758 (1,154) (34,883) 12,721 (5,426) 3,499 10,794 451,367 12 60,949 1,264 47,458 2011 61,743 61,743 17 17 25 (2) 28 37.9 46.0 46.0 9.7 9.7 37.9 (0.9) 3.7 19.1 1.6 1.3 0.9 1.3 0.9 2.0 0.0 0.1 310,112 29,126 5,000 77,500 82,500 82,500 82,500 124,953 207,453 49,494 746 50,240 (2,632) (54,481) (6,873) (8,401) (291) (15,565) 355,224 (2) 48,208 1,341 36,596 2010 32,732 32,732 9 9 1 7 16 0.3 4.6 4.6 2.1 2.1 0.3 2.1 5.3 5.2 40.6 2.8 1.2 2.8 1.2 7 0.0 0.1 308,972 50,980 8,773 81,250 90,023 90,023 90,023 133,743 223,766 (4,886) 42,348 37,462 (7,154) (3,767) 26,541 (27,595) 319 (735) 361,469 (44) 18,899 7,104 20,858 2009 119,468 119,468 18 18 34 (15) 10 4.4 6.6 6.6 3.2 3.2 4.4 (2.2) (0.6) 1.1 1.3 0.9 0.4 0.9 0.4 16 0.0 0.2 343,083 57,754 19,364 86,250 105,614 105,614 105,614 126,519 232,133 61,372 (53,608) 7,764 (6,971) (100,364) (99,571) (14,689) 22,658 (91,602) 647,112 (7) 104,439 18,035 12,706 2008 141,532 141,532 23 23 25 (8) 68 3.8 8.4 8.4 3.3 3.3 3.8 (0.7) 2.8 1.7 1.8 0.8 (0.2) 0.8 (0.2) 14 0.0 0.2 405,644 149,356 25,675 91,250 116,925 116,925 116,925 139,078 256,003 47,352 6,554 53,906 (31,210) (69,618) (46,922) 55,350 14,442 (14,273) 8,597 605,961 (29) 128,024 16,870 80,211
215
Corporates
Sifco S.A.
B B B
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR
Parent Subsidiary Credit Linkage Incorporated: Sifco S.A.s ratings incorporate the close credit linkage of the company and its parent company, G. Brasil Participaes (GB), which has a substantially weaker standalone credit profile. High Leverage: Sifcos leverage is high but improving. As of March 31, 2012, Sifcos net debt/EBITDA ratio was 4.9x, an improvement from 5.6x in 2010. The decrease in leverage was primarily due to the closing of a commercial agreement with Dana Corporation (Dana) in 2011. The ratings incorporate the expectation that Sifcos net leverage will remain in the 4.0x5.0x range during the next 12 to 18 months. Refinancing Risk a Concern: Sifco accounts for about 60% of GBs consolidated debt. Sifcos short-term debt is high in relation to total debt, accounting for about 42% of its total adjusted debt of BRL681 million at the end of 2011. Refinancing risk is high, as the companys cash position of BRL144 million is low relative to BRL286 million of short-term debt as of March 31, 2012. Cash Flow Needs to Improve to Reduce Refinancing Risk: During the LTM ended March 31, 2012, Sifcos CFFO was BRL180 million, while its FCF was BRL101 million. The agreement with Dana increased these figures, as did the incorporation of BR Metals for six months. Sifco generated BRL101 million of CFFO in 2010 and BRL87 million of FCF. Positive Free Cash Flow Expected: Despite the companys volatile operating results, during the past years, CFFO had been positive, with margins at double digits, which has led to positive FCF. In the past, that FCF was used to support weaker sister companies through intercompany loans. The companys recent bond issuance limits the amount of these loans to USD15 million. Fitchs B rating of Sifco incorporates an expectation of positive FCF for the following three years due to lower capital expenditures levels and no dividend outflows. BR Metals Acquisition Forecasts Synergies for Sifcos Operations: Sifco is well positioned as a tier-two regional player, with revenues of BRL1.08 billion and BRL777 million during the LTM ended March 31, 2012 and 2010, respectively. The companys EBITDA improved to BRL102 million from BRL86 million during this time period. The incorporation of BR Metals results for the past six months was one of the factors that led to the change in revenues and EBITDA. Industry Cyclicality and Low Diversification Constrains Ratings: Automotive parts supply represents over 90% of Sifcos sales. The automotive industry is highly cyclical, and the companys high degree of exposure to the Brazilian market is a rating constraint despite positive prospects for the domestic automotive industry in the medium term.
National Long-Term Rating IDR Issuer default rating.
BB(bra)
Rating Outlooks
Financial Data
Sifco S.A. (BRL Mil.) Revenue EBITDA CFFO Total Debt Cash and Marketable Securities Total Debt/EBITDA (x) Net Debt/EBITDA (x) 3/31/12 1,080 102 180 642 144 6.3 4.9 2010 777 86 100 606 122 7.0 5.6
Analysts
Ingo Arajo +55 11 4504-2205 ingo.araujo@fitchratings.com Jose Vertiz +55 11 4504-2600 jose.vertiz@fitchratings.com

GBs Credit Profile Improvement: As the main constraint for the rating, an improvement in GBs credit profile could trigger a positive rating action. Another downturn in this cyclical industry in the near term could lead to a negative rating action
216
Corporates
Recovery Rating
Sifcos recovery rating of RR4 indicates an anticipated recovery for the companys creditors in the range of 31%50% of current principal and related interest in the event of default. The assigned recovery rating considers recovery of cash that is pledged in escrow accounts and fixed assets liens. Fitch has performed a liquidation analysis in the event of a bankruptcy, although this scenario seems unlikely. In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 5.1x distressed EBITDA multiple. This multiple is slightly more conservative than the current 5.8x multiple for U.S. auto suppliers.
Recovery Analysis Sifco S.A.

(BRL Mil.) Available to Creditors 21,596 114,196 49,208 250,392 435,392 Going Concern Enterprise Value March 30, 2012 LTM EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate 15 80 50 45
102,398 25 76,798 5.1 391,672 76,414 15,000 91,414 435,392 43,539 391,853
143,974.0 142,745.0 98,416.0 556,427.0 941,562.0
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims Concession Allocation (0%) Value to be Distributed to Senior Unsecured Claims Value Recovered 271,261.0 Value Recovered 120,592 Recovery Rating RR1 Recovery Rating RR4
391,853 271,261 120,592 120,592
Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 271,261.0 Recovery (%) 0 100 Concession Allocation (%) 0 Notching +3 Rating BB
Lien 370,845.0
Recovery (%) 33
Notching 0
Rating B
217
Corporates
218
Corporates
Debt and Covenant Synopsis Sifco S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amount Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Acquisitions/Divestitures Change of Control Provision Limitations on Sale of Assets or shares Debt Restriction Limitation on Liens Sifco S.A. N.A. May 27, 2011 2016 Senior Unsecured Notes USD75 Million Less than 3.75x. Net debt-to-EBITDA ratio < than (i) 3.75 to 1.0 until March 31, 2012; (ii) 3.50 to 1.0 until March 31, 2013; (iii) 3.25 to 1.0 thereafter. No later than 30 days following a change of control that results in a rating decline, the issuer will make an offer to purchase all outstanding notes at a purchase price equal to 101% of the principal amount plus accrued interest to the date of purchase. The merger, sale of assets or other transaction must not cause a default on the notes, and the issuer must not already be in default, unless the merger or other transaction would cure the default.
Liens in an aggregate principal amount not to exceed 10% of the issuers consolidated total assets. Liens to secure permitted affiliate guarantees. Dividends and Other Payment Restrictions Limitation on dividend and other payments The issuer will not and will not permit any subsidiary to create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any restricted subsidiary to (1) pay dividends or make any other distributions on its capital stock to the Issuer or any subsidiary; (2) pay any indebtedness owed to the issuer or any subsidiary; (3) make loans or advances to the issuer or any significant subsidiary or (4) transfer any of its properties or assets to the issuer or any significant subsidiary. Others Limitation on transactions with affiliates With certain exceptions, the issuer and subsidiary shall not make any payment, or sell, lease, transfer, or dispose of any of its properties or assets or enter into any transaction or contract for the benefit of any affiliate. No new intercompany loans to affiliates in excess of USD15 million. Limitation on Consolidation, Merger, With certain exceptions, the Issuer will not consolidate with or merge with or convey, transfer or lease all or substantially all of Conveyance, Sale or Lease its assets to any person. Cross acceleration Cross acceleration of other debt with a USD5 million threshold. N.A. Not applicable. Disclaimers: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
219
Corporates
Financial Summary Sifco S.A.
(BRL 000, Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Average Return on Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions. and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch Ratings. LTM 3/30/12 102,398 102,398 9.5 9.5 20.4 9.4 (14.3) 2.2 1.3 1.3 0.3 0.3 2.2 0.5 0.9 2.3 3.8 6.3 4.9 6.3 4.9 12 0.4 1,491,355 143,974 285,758 356,348 642,106 642,106 0 642,106 190,795 832,901 93,831 86,499 180,330 0 (78,912) 0 101,418 (214) (80,205) (64,290) 0 2,529 (40,762) 2011 104,596 104,596 9.8 9.8 19.8 13.6 (0.4) 2.4 1.4 1.4 0.3 0.3 2.4 0.6 1.1 3.5 3.9 6.5 4.9 6.5 4.9 11 0.4 1,510,217 166,625 288,104 393,217 681,321 681,321 0 681,321 205,387 886,708 102,268 102,189 204,457 0 (58,835) 0 145,622 (214) (121,138) 19,257 0 2,307 45,834 2010 86,205 86,205 11.1 11.1 18.0 11.2 8.6 2.9 1.7 1.7 0.3 0.3 2.9 0.5 0.9 7.4 4.2 7.0 5.6 7.0 5.6 10 0.4 1,046,040 122,084 237,764 368,282 606,046 606,046 0 606,046 196,231 802,277 93,838 6,962 100,800 0 (13,690) 0 87,110 0 0 (52,887) 0 21 34,244 2009 37,088 37,088 8.5 8.5 10.9 16.7 26.7 3.4 2.1 2.1 0.4 0.4 3.4 1.0 1.9 5.2 6.5 10.3 8.0 10.3 8.0 5 0.2 723,445 85,727 74,650 307,643 382,293 382,293 0 382,293 156,722 539,015 41,269 48,454 89,723 0 (17,366) 0 72,357 0 (6,245) (1,681) (36,360) (1,054) 27,017 2008 86,211 86,211 13.8 13.8 21.6 4.3 (4.0) 6.3 4.7 4.7 0.8 0.8 6.3 0.4 1.0 1.6 2.6 3.5 2.8 3.5 2.8 7 0.3 732,947 58,710 90,318 213,667 303,985 303,985 0 303,985 227,780 531,765 96,731 (15,308) 81,423 0 (52,330) (2,500) 26,593 0 (1,396) 25,293 0 (6,042) 44,448
1,080,268 55,497 76,414 0 (13,684)
1,071,495 38 62,735 73,720 0 (877)
777,334 79 63,708 50,645 0 15,228
434,171 (30) (46,039) 17,551 0 51,288
624,368 12 70,016 18,300 0 (9,067)
220
Corporates
Telecom Argentina S.A. (TEO)
B
Ratings
Foreign Currency Long-Term IDR Local Currency Long-Term IDR IDR Issuer default rating. BB
Argentine Risks Constrain Foreign Currency IDR at B: Telecom Argentina S.A.s (TEO) B foreign currency issuer default rating (IDR) is constrained by Argentinas country ceiling of B. In addition to transfer and convertibility (T&C) risks that constrain the foreign currency IDR at B, additional credit constraints related to the Argentine government include high regulatory risks for fixed-line operators, as well as risks associated with operating in an environment of high inflation. Solid Operations and Market Position Support BB Local Currency IDR: The companys strong operating performance, solid market position, diversified services portfolio with multiple platforms, and conservative financial profile all support a local currency rating that is two notches higher than TEOs foreign currency IDR. Diversified Business Mix Lowers Risks: TEO provides both fixed and mobile services in Argentina. The mobile business unit is the main driver of the companys operating performance, accounting for 70% of revenues and EBITDA during the six months ended June 30, 2012. TEOs incumbent position in northern Argentina in fixed-line services and mobile services mitigates potential fixed-line traffic loss due to mobile substitution. Fitch Ratings believes fixedmobile convergence can help integrated operators such as TEO improve customer loyalty, reduce operating costs, and avoid cannibalization between business segments. Improved Financial Profile: TEOs financial profile has improved considerably during the last seven years, driven primarily by better operating results and the use of free cash flow for debt reduction. During 2011, the companys revenues grew by 26.2% when compared with the previous year, driven by the mobile segment. Fitch expects TEOs growth to slow as the market matures. The solid operating performance during 2011 has resulted in almost no leverage.
Rating Outlooks
Financial Data
Telecom Argentina S.A. IFRS 6/30/12 10,389 3.140 30.2 133 0 448.6 4,148 1,594 20,965 Local GAAP 12/31/11 18,525 5,619 30.3 134 0 224.8 4,141 1,550 20,324
(ARS Mil.) Revenue EBITDA Margin (%) Debt Debt/EBITDA (x) EBITDA/Interest (x) Lines in Service (000) Broadband Accesses (000) Mobile Subscribers (000)

Changes Affecting Financial Structure: The Stable Outlook reflects Fitchs expectations that TEO will maintain a strong operating performance and a conservative financial profile. Changes in Country Ceiling: TEOs foreign currency IDR would likely be affected by an upgrade or downgrade in Argentinas B country ceiling.

Liquidity Risk for TEO Is Low: As of Dec. 31, 2011, cash balances totaled approximately ARS2.8 billion, while total debt was ARS134 million. During 2011, free cash flow was ARS1.5 billion. As of June 30, 2012, TEOs debt continued to have a minimum amount of debt. Change of Accounting Rules: TEOs audited financials up to fiscal 2011 were in Argentinian GAAP. Since Jan. 1, 2012, the company has adopted IFRS. As a result, Fitch will not show LTM figures for the company during 2012.
Analysts
Fernando Torres +54 11 5235-8124 fernando.torres@fitchratings.com Sergio Rodriguez, CFA +52 81 8399-9100 sergio.rodriguez@fitchratings.com
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Corporates
Organizational Structure Telecom Argentina S.A.
(ARS Mil., As of Dec. 31, 2011)
Telecom Italia 68.00% Grupo Werthein 32.00%
Sofora Telecomunicaciones
74.00%
Estructura de Capital
Nortel Inversora 54.74% Telecom Argentina S.A.
51.04%
Participacin Econmica
Amount Outstanding 2011 EBITDA 2011 Total Consolidated Debt 2011 Cash and Marketable Securities TD/EBITDA (x) 5,619 140 3,122 0.02 99.99% Telecom Personal 67.50% Nucleo (Paraguay) 100.00% Springville
99.99% Micro Sistemas
100.00% Telecom USA
TD Total debt. Source: Fitch and Telecom Argentina financial statements.
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Corporates
Financial Summary Telecom Argentina S.A.
(ARS Mil.) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Continued on next page. Source: Telecom Argentina S.A. NIIF 3/31/12 Three Months 1,648 32.1 511.3 549.3 183.1 511.3 51.1 1,926.7 1.5 0.0 0.0 (0.5) 8.8 0.2 15,815 3,122 24 116 140 140 140 8,875 9,015 1,531 (229) 1,302 (845) 457 (6) (156) (3) 292 2011 5,619 5,619 30.3 0.3 61.9 8.4 0.3 200.6 224.8 224.8 127.7 127.7 200.6 35.9 99.9 2.1 0.0 0.0 (0.5) 0.0 (0.5) 16.8 0.1 14,825 2,818 19 115 134 134 134 7,960 8,094 4,989 (300) 4,689 (2,220) (915) 1,554 (135) 59 (45) 1,433 LTM 6/30/11 5,093 5,093 30.7 30.7 51.9 10.9 35.9 53.0 74.9 74.9 41.4 41.4 53.0 15.3 26.9 2.1 0.1 (0.2) (0.2) 12.9 0.3 12,069 1,425 55 134 189 189 189 6,756 6,945 3,537 596 4,133 (1,954) (364) 1,815 (19) (320) (690) (915) 30 (99) 2010 4,555 4,555 31.0 31.0 49.0 5.5 30.6 32.9 47.0 47.0 32.8 32.8 32.9 6.5 16.5 2.0 0.1 (0.3) (0.3) 19.7 0.3 11,964 1,387 42 121 163 163 163 6,363 6,526 3,098 562 3,660 (1,803) (1,053) 804 (27) 25 (690) 112 2009 3,900 3,900 31.9 31.9 57.0 14.7 29.2 24.8 26.7 26.7 4.3 4.3 24.8 2.1 3.6 2.2 0.2 0.2 (0.1) 0.2 (0.1) 10.2 0.9 10,633 1,289 763 58 821 821 821 5,528 6,349 3,476 (188) 3,288 (1,474) (19) 1,795 (17) 260 (1,491) (176) 371 2008 3,330 3,330 31.4 31.4 58.6 14.8 26.7 15.3 14.1 14.1 2.1 2.1 15.3 1.1 1.8 2.0 0.6 0.6 0.3 0.6 0.3 9.0 0.7 9,649 1,125 1,355 688 2,043 2,043 2,043 4,101 6,144 3,364 (230) 3,134 (1,546) (20) 1,568 (112) 341 (1,353) 444 2007 3,052 3,052 33.6 33.6 52.4 15.5 33.3 9.3 8.6 8.6 1.7 1.7 9.3 1.0 1.5 2.2 1.0 1.0 0.7 1.0 0.7 9.7 0.5 9,171 992 1,474 1,724 3,198 3,198 3,198 3,109 6,307 2,947 (294) 2,653 (1,208) (38) 1,407 147 (512) (1,245) (203) 2006 2,285 2,285 31.0 31.0 38.1 15.2 11.9 5.0 4.7 4.7 1.2 1.2 5.0 0.9 1.2 2.4 1.7 1.8 1.5 1.8 1.5 10.7 0.3 8,720 661 1,395 2,703 4,098 4,098 4,098 2,201 6,299 1,916 30 1,946 (825) 1,121 (41) 62 (1,077) (4) 61
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Corporates
Financial Summary Telecom Argentina S.A. (Continued)
(ARS Mil.) Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Telecom Argentina S.A. NIIF 3/30/12 Three Months 5,126 1,033 3 698 2011 18,525 26 4,040 25 2,422 LTM 6/2011 16,578 26 3,625 68 2,172 2010 14,679 20 3,201 97 1,821 2009 12,226 15 2,762 146 1,405 2008 10,608 17 2,041 236 961 2007 9,074 23 1,636 355 884 2006 7,372 30 894 482 244
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Corporates
Transportadora de Gas del Norte S.A. (TGN)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured USD170.45 Notes Senior Unsecured USD56.8 Notes USD250 Mil. Notes USD250 Mil. Notes Local Currency Long-Term IDR National Long-Term Rating USD170.45 Mil. Notes USD56.8Mil. Debt Program USD250 Mil. Notes USD250 Mil. Notes Equity IDR Issuer default rating. CCC CCC/ RR4 CCC/ RR4 C/RR5 C/RR5
Key Rating Drivers

High Leverage: Fitch Ratings anticipates that TGNs ability to meet interest payments on its restructured debt will be extremely limited due to its weak operating profile. TGN continues to exhibit high leverage as reflected by its pro forma debt-to-EBITDA ratio of 21.4x following the debt restructuring completed in August 2012. New notes for USD201 million were issued as part of the restructuring, and total debt was reduced to USD257 million from USD473.5 million. Weak Operating Profile: The companys ability to generate cash has been severely affected by a frozen tariff structure since 1999 compounded by inflation, limitation on natural gas exports, and peso depreciation. Operational cash flow is expected to be modestly positive in 2012 as the company will receive approximately USD47 million from the settlement of export related contracts. Invoices will materially decrease in 2013 and 2014 as a result, and operational cash flow is expected to turn negative. Negative cash generation is expected to increase in magnitude in the absence of a tariff increase or any additional source of funds. Uncertain Regulatory Environment: Tariffs have remained frozen since 1999. Although the government ratified a 20% tariff increase in April 2010, the regulatory entity has failed to approve the new tariff scheme. In the event that this tariff increase is retrospectively invoiced by TGN, the monies received would be administered by a special fund and would be used to finance the companys capital expenditure. A third-party designated by the regulator has been overviewing the companys operations since 2008. Debt in Default: Approximately USD41.3 million of TGNs 2012 notes have not been tendered in the companys exchange offering and remain in default. The amount of defaulted notes increases to USD56.6 million after including penalties and capital interest. The C rating on the 2012 notes reflects the expectation of below-average recovery prospects given the default. TGN recently announced its intention to restructure the debt in default.
CCC CCC(arg) CCC(arg) CCC(arg) D(arg) D(arg) Level 4
Financial Data
Transportadora de Gas del Norte S.A. (ARS Mil.) Total Equity Total Debt Operating Revenue Net Income Net Debt/ EBITDA (x) 6/30/12 1,004 2,142 418 (262) 26.0. 12/31/11 1,145 1,942 406 (154) 16.3.

Implementation of Tariff Increases: A successfully implemented tariff increase, along with a tangible, positive impact on TGNs operations, could result in a Positive Outlook or rating upgrade. Weaker Financial Performance: A further deterioration in TGNs operating profile, additional government intervention in the sector or in the company, and/or failure to fulfill its debt obligations could result in a Negative Outlook or rating action.
Analyst
225
Corporates
Recovery Analysis
Fitch expects a higher recovery value under a liquidation scenario, as opposed to a goingconcern sale for TGN. Fitchs recovery analysis applies a 50% discount rate to the companys accounts receivables to reflect the deterioration in the credit quality of some counterparties, particularly natural gas distribution companies. Fitch has also adjusted the discount rate for net PP&E to 20%, as the value of the assets is expected to decrease in the event of liquidation. The recovery analysis assumes a standard 10% administrative claims adjustment and 5% concession to junior claimants. Fitch has included the post-restructuring bonds in this scenario, including the maximum allowed interest capitalization and the bonds that remain in default. TGNs new notes are better positioned than the notes in default as they have been restructured. The recovery rating for TGNs new debt instrument reflects Fitchs expectation that the companys creditors would have an average recovery consistent with a recovery rating of RR4. The RR4 indicates a recovery prospect of 31%50% of current principal and related interest. It is difficult to anticipate the recovery value for bondholders that did not participate in the debt restructuring but, in the event of liquidation, the companys assets should have some value. Fitch expects that creditors will have a below-average recovery consistent with an RR5, which indicates a probability of recovery of 11%30% of current principal and related interest for the notes that are still in default.
226
Corporates
Recovery Analysis Transportadora de Gas del Norte S.A. (TGN)
(USD Mil.) IDR: CCC Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Rate (%) 0 50 50 20 Available to Creditors 6.5 2.0 87.6 96.1 Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 0 0 Value Recovered Recovery (%) 0 0 Recovery Rating Notching Rating 0 0 161.0 13.0 4.0 438.0 616.0
96.10 9.61 86.49
86.5 86.5 4.3 82.2 Value Recovered 86.5 Recovery (%) 38 0 Concession Allocation (%) 100 0 Recovery Rating RR4 RR5
Unsecured Priority Restructured Notes Notes in Default
Lien 224.7 56.6
Notching 0 2
Rating CCC C
Source: Transportadora de Gas del Norte S.A. (TGN).
227
Corporates
Organizational Structure Transportadora de Gas del Norte S.A.
Tecpint 27.24%
CGC 27.34%
TGEA 20.60%
RPM 18.29%
Total 6.63%
Gasinvest 56.35%
Blue Ridge 23.53%
Free Float 20.00%
Others 0.12%
Transportadora Gas del Norte S.A. 1H12 EBITDA: ARS24 Million 1H12 Debt: ARS2,142 Million TD/EBITDA (x): 43
TD Total debt. Source: TGNs quarterly results and Fitchs estimates.
228
Corporates
Debt and Covenant Synopsis Transportador de Gas del Norte S.A. (TGN)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Transportadora Gas del Norte S.A. (TGN) N.A. Sept. 14, 2006 Dec. 31, 2012 (Defaulted on January 2009) Senior Unsecured Notes N.A. N.A. Change-of-control clause at 101% of principal. The issuer and its affiliates cannot sell assets unless: 1) at least 75% is paid in cash, 2) the issuer remains in compliance with the terms and conditions of the notes, and 3) net proceeds are used to repurchase outstanding notes. Neither the issuer nor its affiliates are allowed to incur additional debt except permitted debt. Permitted debt includes debt used to refinance existing or permitted indebtedness, subject to standard limitations. TGN is allowed to incur or maintain up to USD15 million of additional indebtedness, and up to USD35 million of additional subordinated debt. Should the issuer or its affiliates incur additional indebtedness, TGN is required to maintain consolidated debt to EBITDA (as defined in the indenture) equal to or below 3.5x. Subject to certain conditions, TGN or its subsidiaries may incur in liens on assets, trade receivables, or future flows when: 1) the lien is permitted by the concession agreement and 2) if the guaranteed debt is subordinated and the notes are also secured by such lien. The issuer and its affiliates are prohibited from paying dividends, technical assistance services above USD1 million in the event of default, and payments on subordinated indebtedness. The issuer and its affiliates are allowed to make restricted payments if 1) no event of default occurs or is continuing or 2) there is sufficient liquidity (as defined in the indenture) to make such payment. Cross default when an uncured event of default occurs for debt of more than USD15 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency or bankruptcy. Intercompany loans are subordinated. The issuer may purchase Series A notes at par. After the full amortization of Series A, the issuer may purchase Series B notes at 101% in 2010, 105.5% in 2011, and at par in 2012. Transactions between the issuer and affiliates should follow good business practices. Restrictions on merger or consolidation of issuer and subsidiaries. Exceptions require that: 1) bondholders have the opportunity to oppose such transactions; 2) the surviving entity will be the issuer or another corporation existing under the laws of Argentina; 3) the surviving entity assumes the existing debt; 4) no event of default occurs or is continuing; 5) the companys pro forma net worth is similar or higher than an existing one prior to such transaction; and 6) the resulting consolidated debt-to-EBITDA ratio is equal or below to the one prior to such transaction. The note will be redeemed on a pro rata basis if the issuer or affiliates sell assets.
PIK Interest Rate Intercompany Loans Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
Mandatory Redemption N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
229
Corporates
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Transportadora Gas Del Norte S.A. (TGN) N.A. July 12, 2012 Seven Years Senior Unsecured USD170.45 Mil. Step-Up Notes N.A. N.A. Change-of-control clause at 101% of principal. The issuer and its affiliates cannot sell assets unless: 1) at least 75% is paid in cash, 2) the issuer remains in compliance with the terms and conditions of the notes, and 3) net proceeds are used to repurchase outstanding notes. Neither the issuer nor its affiliates are allowed to incur additional debt except permitted debt. Permitted debt includes: 1) debt used to refinance existing or permitted indebtedness, subject to standard limitations, 2) up to USD15 million of additional indebtedness, provided such funds are used for purposes related to the operations of the company, 3) other indebtedness, if proceeds are applied solely to fund permitted capital expenditures, provided that TGN maintains a leverage ratio of 3.0x after giving effect to such transaction. Subject to certain conditions, TGN or its subsidiaries may incur liens on assets of up to USD10 million, and on receivables up to USD30 million. The issuer and its affiliates are prohibited from paying dividends. Restrictions also apply for technical assistance services so long as TGN capitalizes interest under the notes and until all capitalized amounts have been paid. The issuer and its affiliates are allowed to make restricted payments if 1) no event of default occurs or is continuing and 2) there is sufficient liquidity as defined in the indenture to make such payment. Cross default when an uncured event of default occurs for debt of more than USD 15 million. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency, bankruptcy, or in the event the license is revoked or suspended for at least 120 days. The new step-up notes will carry a coupon rate that steps up over the course of the notes of 3.5% for years one and two, 7% for years three and four, and 9% for years five through seven. The interest payment can be picked during the first three years, and there is a minimum cash interest payment of 3.5% in year four, with the option for TGN to capitalize the remainder. Intercompany loans are permitted and are subordinated to the notes. The issuer may purchase the notes, in whole or in part, at 100% of the principal plus accrued unpaid interest. Transactions between issuer and affiliates should follow good business practices. Restrictions on the merger or consolidation of issuer and subsidiaries. Exceptions require that: 1) bondholders have the opportunity to oppose to such transaction; 2) the surviving entity will be the issuer or another corporation existing under the laws of Argentina; 3) the surviving entity assumes the existing debt; 4) no event of default occurs or is continuing; 5) the companys pro forma net worth is similar or higher than an existing one prior to such transaction; and 6) the resulting consolidated leverage is equal to or below the one prior to such transaction. The notes will be redeemed should there be any incremental cash, distributable cash, and creditor cash surplus available, as defined in the terms and conditions of the notes. The prepayment will be initially applied to any accrued capitalized interest payment and then to principal. The notes will also be redeemed with proceeds from asset sales and expropriations of assets with a market value in excess of USD5 million, and with proceeds from an equity issuance. TGN can invest in permitted capital expenditures provided that immediately afterwards, no event of default has occurred or is continuing. Permitted capital expenditures include the maintenance of capex for up to USD20 million per fiscal year, capex related to unscheduled emergency repair, and the maintenance of government-mandated capex.
PIK Interest Rate
Intercompany Loans Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
Mandatory Redemption
Limitation on Capital Expenditures
230
Corporates
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision Sale of Assets Restriction Transportadora Gas Del Norte S.A. (TGN) N.A. July 12, 2012 The claim protection notes will be automatically cancelled on the first anniversary of the debt restructuring settlement, without any payment from TGN, provided that no event of default has occurred. Should they not be extinguished at that time, the claim protection notes will mature seven years from the final settlement date. Senior Unsecured USD56.8 Million Claim Protection Notes N.A. N.A. Change of control clause at 101% of principal, if a triggering event has occurred. A triggering event is defined as the declaration or automatic acceleration of the step- up notes. The issuer and its affiliates cannot sell assets unless: 1) at least 75% is paid in cash, 2) the issuer remains in compliance with the terms and conditions of the notes, and 3) net proceeds are used to repurchase outstanding notes, including the claim protection notes if a triggering event has occurred (as defined in the indenture). Neither the issuer nor its affiliates are allowed to incur additional debt except permitted debt. Permitted debt includes: 1) debt used to refinance existing or permitted indebtedness, subject to standard limitations; 2) up to USD15 million of additional indebtedness, provided such funds are used for purposes related to the operations of the company; and 3) other indebtedness, if proceeds are applied solely to fund permitted capital expenditures, provided that TGN maintains a leverage ratio of 3.0x after giving effect to such transaction. Subject to certain conditions, TGN or its subsidiaries may incur liens on assets up to USD10 million and on receivables, up to USD30 million. The issuer and its affiliates are prohibited from paying dividends and other restricted payments. Cross default when an uncured event of default occurs for debt of more than USD15 million. Also, if after the occurrence of a triggering event (as defined in the indenture) TGN fails to pay interest on the new step-un notes during 15 business days. If any event of default occurs and is continuing, the trustee or the holders of at least 25% of the outstanding notes may declare the notes to be due and payable. Notes become automatically due and payable upon certain events of insolvency, bankruptcy, or in the event the license is revoked or suspended for at least 120 days. N.A. Intercompany loans are permitted and are subordinated to the notes. The issuer may purchase the notes, in whole or in part, at 100% of the principal. Transactions between the issuer and affiliates should follow good business practices. Restrictions on the merger or consolidation of the issuer and subsidiaries. Exceptions require that: 1) bondholders have the opportunity to oppose such a transaction; 2) the surviving entity will be the issuer or another corporation existing under the laws of Argentina; 3) the surviving entity assumes the existing debt; 4) no event of default occurs or is continuing; 5) the companys pro forma net worth is similar to or higher than the existing one prior to such transaction; and 6) the resulting consolidated leverage is equal to or below the one prior to such transaction. If a triggering event has occurred and there is any incremental cash, distributable cash, or creditor cash surplus available, the notes will be redeemed on a pro rata basis with the new step up notes. TGN can invest in permitted capital expenditures provided that, immediately after, no event of default has occurred or is continuing. Permitted capital expenditures include the maintenance of capex for up to USD 20 million per fiscal year, capex related to unscheduled emergency repair, and the maintenance of government-mandated capex.
Limitation on Secured Debt Restricted Payments Other Cross Default Acceleration
PIK Interest Rate Intercompany Loans Restriction on Purchase of Notes Transactions with Affiliates Limits on Consolidations or Mergers
Mandatory Redemption Limitation on Capital Expenditures
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Corporates
Financial Summary Transportador de Gas del Norte S.A. (TGN)
Period-End Exchange Rate (ARS/USD) Period Average Exchange Rate (ARS/USD) (ARS Mil., Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Fitch. 4.5238 4.3011 LTM 6/30/12 11,475 11.8 21.0 88.2 (22.9) 3.4 0.3 0.0 3.4 0.3 0.6 6.9 3.1 41.3 26.0 10.0 1.0 765,608 175,143 473,531 473,531 473,531 473,531 222,127 695,658 108,275 (7,895) 100,380 0 (14,615) 0 85,766 0 (66,953) 0 0 (196) 18,617 97,189 (19,999) 45,133 0 (60,805) 4.3053 4.1295 2011 18,347 18.6 15.8 41.0 (12.6) 2.7 0.4 0.0 2.7 0.2 0.5 3.7 3.8 24.6 16.3 10.1 1.0 779,888 152,657 451,149 451,149 451,149 451,149 266,106 717,255 74,676 (19,460) 55,215 0 (14,808) 0 40,407 0 (58,310) 0 0 0 (17,903) 98,541 (22.1) (13,886) 43,440 0 (37,312) 3.9787 3.9134 2010 48,429 38.3 16.4 37.4 5.7 3.5 1.4 0.1 3.5 0.2 0.5 3.4 3.3 8.5 6.0 8.9 1.0 800,842 123,270 411,438 411,438 411,438 411,438 326,676 738,114 88,180 (20,859) 67,321 0 (19,942) 0 47,379 0 (44,823) 0 0 (60) 2,497 126,550 (11.1) 14,836 35,058 0 18,670 3.799 3.7279 2009 71,076 49.9 16.8 34.4 (4.0) 4.1 2.4 0.2 4.1 0.2 0.4 3.3 3.2 5.3 4.2 8.0 1.0 757,594 80,098 378,867 378,867 378,867 378,867 322,896 701,763 90,719 (20,851) 69,868 0 (20,863) 0 49,005 0 (3,078) 0 0 (8,698) 37,229 142,430 (10.7) 37,257 29,237 0 (13,827) 3.4538 3.1631 2008 89,953 56.4 13.5 28.3 (2.7) 4.4 3.8 0.2 4.4 0.2 0.3 4.1 3.3 3.9 3.4 6.7 1.0 764,159 44,583 351,197 351,197 351,197 351,197 370,093 721,290 82,045 (22,460) 59,585 0 (14,400) 0 45,185 0 0 (17,261) 0 159 28,083 159,491 (4.1) 50,843 23,916 0 (10,602)
232
Corporates
Transportadora de Gas del Sur S.A. (TGS)
B B/RR4 B+
Ratings
Foreign Currency Long-Term IDR Senior Unsecured notes due 2017 Local Currency Long-Term IDR IDR Issuer default rating.
Foreign Currency IDR Constrained: TGS foreign currency issuer default rating (IDR) is constrained by Argentinas country ceiling of B and its recovery rating of RR4 is constrained by the soft cap of RR4 for bonds issued by Argentine corporates. Country ceilings capture the risk of exchange controls being imposed that would prevent or materially impede the private sectors ability to convert local currency and transfer the proceeds to nonresident creditors transfer and convertibility risk (T&C) risk. High Regulatory Risk: The weak regulatory framework has affected TGS original business model. The companys core business, its natural gas transportation unit, has been operating with frozen tariffs since 1999, reducing its share of EBITDA to approximately 35%. Its liquefied natural gas (LNG) processing unit represents the remaining 65%. The companys credit quality would come under additional pressure, should unfavorable regulatory and operating events affect TGS LNG business unit. Recently, a court suspended the application of an increase in a tariff charge to be paid by natural gas processors. Conservative Leverage Is a Key Credit Consideration: TGS conservative capital structure mitigates some existing operational and regulatory risks. As of June 2012, debt was USD378 million, with a debt to EBITDA of 2.1x, which is low for the credit category. Debt is concentrated in the long term with no debt maturities until May 2014. Until then, the companys annual debt service consists of approximately USD30 million in interest payments. Satisfactory Operating Performance: Despite frozen tariffs for its pipeline business and rising inflation, TGS has maintained good cash generation levels, which mostly reflect high international prices for LNG. To a lesser extent an increase in 2011 of its pipeline utilization factor increased to 81% also helped cash flow. For the LTM ended June 30, 2012 TGS EBITDA was 182 million, similar to 2011. Near-term capital expenditures are expected to remain at approximately USD40 million, which should allow the company to generate USD40 million to USD55 million of free cash flow and maintain considerable financial flexibility for the rating category.
Rating Outlooks
Financial Data
Transportadora de Gas del Sur S.A. LTM (USD Mil.) 6/30/12 12/31/11 Revenue 497 449 EBITDA 182 187 CFFO 123 107 Cash and Marketable Securities 150 107 Total Debt 378 378 Total Debt/ EBITDA (x) 2.1 2.0 Net Debt/ EBITDA (x) 1.2 1.4

Natural Gas Unavailability: A prolonged unavailability of natural gas for TGS LNG business could result in a negative rating action. Gas shortages are the result of the redirection of natural gas for residential consumption. Gas shortages are somewhat mitigated through the companys strategy to pursue gas contracts with producers. The maintenance of frozen tariffs also constitutes one of TGS main risks. Sharp and Sustained Decrease in LNG Prices: A sharp and sustained decrease in LNG prices could be a catalyst for a negative rating action. Change in Sovereign Credit Quality: TGS ratings would be affected by an upgrade or downgrade of Argentinas country ceiling.
Analysts
233
Corporates
Recovery Rating
In deriving a distressed enterprise valuation to determine the recovery under this scenario, Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Although the EBITDA is vulnerable to unfavorable regulatory and operating events, it should be noted that TGS has financial flexibility as interests and minimum capital expenditures are marginal compared to its distressed cash flow generation. Fitch has applied a 5.0x distressed EBITDA multiple, which reflects adequate cash generation in an event of distress when compared to interest payments and capital expenditures. The bespoke recovery analysis indicates extremely high recovery prospects. Despite this analysis, the ratings have been constrained by the soft cap of RR4 for bonds issued by corporates domiciled in Argentina. This recovery rating is consistent with an expectation that the companys creditors would have an average recovery in the event of a default.
Recovery Analysis Transportadora de Gas del Sur S.A. (TGS)

(USD Mil., As of June 30, 2012) Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 0.0 Value Recovered Recovery (%) 0 0 Recovery Rating Notching Rating IDR: B Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Rate (%) 0 65 55 40 Available to Creditors 37.1 352.4 389.5 182.0 35 118.3 5.0 591.5 150.0 57.0 881.0 1,088.0
30.0 40.0 70.0
591.5 59.2 532.4
532.4 532.4 26.6 505.7 Value Recovered 375.0 Recovery (%) 100 Concession Allocation (%) 100 Recovery Rating RR4
Unsecured Priority Senior Unsecureda Unsecured
Lien 375.0
Notching 0
Rating B
Note: Numbers may not add due to rounding. Source: Transportadora de Gas del Sur S.A. (TGS).
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Corporates
Organizational Structure Transportadora de Gas del Sur (TGS) (As of LTM June 30, 2012)
Petrobras Group 50%
CIESA Trust 40% CIESA 51%
Pampa Energia 10%
Public Float 49%
Transportadora de Gas del Sur S.A. EBITDA: USD182 Million Consolidated Total Debt: USD378 Million TD/EBITDA: 2.1x ND/EBITD: 1.2x 100% Telcosur S.A.
TD Total debt. ND Net debt. Source: Transener and subsidiaries financial statements, Fitch.
235
Corporates
Debt and Covenant Synopsis Transportadora de Gas del Sur S.A. (TGS)
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Sale of Assets Restriction Debt Restriction Additional Debt Restriction Restricted Payments Transportadora de Gas del Sur S.A. N.A. (Debt is senior unsecured) Jan. 18, 2007 May 14, 2017 Senior Unsecured Notes N.A N.A. N.A. N.A. The issuer can incur in new debt only if (1) consolidated leverage coverage ratio known as debt/EBITDA is less or equal than 2,0x; (2) EBITDA/interest expense is at a minimum of 3.75x after additional debt is assumed; and (3) for refinancing reasons. Dividends may be only distributed if the issuer is not in breach of its financial commitments with its debt holders. Additionally, for the issuer to be able to issue dividends, immediately after such payment, the issuer should be able to assume more debt without surpassing 2.0x debt/EBITDA and maintain a minimum interest coverage ratio of 3.75x. Transactions between issuer and affiliates are only permitted if they reflect market conditions or if they are not unfavorable to the issuer. Restrictions on the merger of issuer and subsidiaries. Exceptions include that the surviving entity will be a corporation existing under the laws of Argentina or the U.S., no event of default occurs or is continuing, the companys pro forma debt levels, allowing it to incur additional indebtedness. Any surviving entity would assume all obligations of issuers under the indenture.
Other Transactions with Affiliates Limits on Consolidations or Mergers
236
Corporates
Financial Summary Transportadora de Gas del Sur S.A. (TGS)
Period-End Exchange Rate Average Exchange Rate (ARS 000, Fiscal Years Ended Dec. 31) Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDA/ Debt-Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income
a
4.5238 4.3012 6/30/12a 784,354 36.7 16.6 16.7 9.5 4.1 5.2 4.7 4.1 3.0 7.1 3.1 2.7 2.2 1.3 9.2 0.0 5,155,273 680,646 16,668 1,693,207 1,709,875 1,709,875 1,709,875 2,054,064 3,763,939 474,214 54,984 529,198 (172,260) 356,938 (109,382) 70,108 317,664 2,138,724 27 557,155 150,769 212,514
4.3053 4.1295 2011 773,923 41.7 17.9 (38.0) 8.8 4.4 5.4 4.8 4.4 (3.5) (0.6) 2.6 2.5 2.1 1.5 9.2 0.0 5,024,166 459,292 15,846 1,609,799 1,625,645 1,625,645 1,625,645 1,953,492 3,579,137 497,906 (57,470) 440,436 (168,299) (976,000) (703,863) (109,073) 70,108 (742,828) 1,853,875 13 552,493 144,517 230,679
3.9787 3.9134 2010 578,689 35.0 7.4 8.9 3.1 2.8 4.5 4.0 2.8 1.9 9.5 2.2 4.2 2.6 0.7 8.5 0.0 5,611,345 1,089,480 14,661 1,487,119 1,501,780 1,501,780 1,501,780 3,293,020 4,794,800 227,511 92,999 320,510 (143,770) (30,325) 146,415 926 (83,003) 64,338 1,653,001 12 363,393 128,806 102,236
3.7990 3.7279 2009 770,961 48.2 17.0 20.8 5.7 5.3 5.1 4.6 5.3 2.9 9.1 3.4 1.9 2.0 0.6 10.3 0.0 5,619,190 1,025,142 14,983 1,502,330 1,517,313 1,517,313 1,517,313 3,221,109 4,738,422 654,353 (142,716) 511,637 (149,147) (30,000) 332,490 (25,497) 113,459 420,452 1,600,648 13 561,517 151,416 178,380
3.4700 3.1800 2008 636,200 44.8 16.0 23.2 5.8 5.1 4.5 4.1 5.1 3.0 6.9 2.6 2.0 2.2 1.3 9.4 0.0 5,033,324 604,690 13,932 1,398,465 1,412,397 1,412,397 1,412,397 3,072,729 4,485,126 577,127 4,954 582,081 (220,792) (32,000) 329,289 28,386 (191,486) 47,183 213,372 1,419,202 13 431,432 140,944 175,091
June 30, 2012 six-month figures. Note: Numbers may not add due to rounding. Source: Fitch.
237
Corporates
Urbi Desarrollos Urbanos, S.A. B. de C.V.
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating Short-Term Rating Senior Unsecured BBB(mex) F3(mex) BBB(mex)
Key Rating Drivers

B B/RR4 B
High Rate of Cash Burn: Urbi Desarrollos Urbanos, S.A.B. de C.V. (Urbi) exhibited a negative FCF of MXN5.8 billion during the LTM ended June 30, 2012, mainly due to a MXN7 billion working capital outflow during the period. This level of negative FCF represents 35% and 98% of the companys LTM revenue and cash position, respectively. Tightening Liquidity: The continued decline in Urbis cash on balance sheet will result in a higher short-term debt position for the company. Liquidity could significantly deteriorate during the next few quarters should the current trend continue. As of June 30, 2012, Urbi maintained an adequate cash position of MXN5.5 billion, while its short-term debt was MXN3.5 billion, comprised mostly of bank loans. Higher Leverage: Urbi funded its cash flow shortfall with additional debt. The company had MXN19.4 billion of debt at June 30, 2012, an increase from MXN10.9 billion at the end of 2010. This resulted in an increase in the companys total debt/EBITDA ratio to 4.4x as of June 30, 2012 from 2.7x as of Dec. 31, 2010, and an increase in its net debt/EBITDA ratio to 3.0x from 1.2x during this time period. 2012 Growth Expectations Adjusted Down: Fitch Ratings expects Urbis 2012 revenues to decline between 10% and 15% from 2011 levels. After poor FCF generation in second-quarter 2012, the company has announced its intention to reduce growth and improve FCF generation. Large Player in Fragmented Industry: The ratings reflect Urbis business position as one of the three largest players in the Mexican homebuilding industry, with important participation in government-related mortgage funding programs. Business Strategy Incorporated: The ratings are constrained by Urbis high working capital requirements that reflect its business strategy of covering the affiliated and non-affiliated segments, as well as increasing exposure with corporate clients that require collection periods of between nine and 36 months. They also reflect the companys track record of growing inorganically through opportunistic acquisitions of housing projects in progress (HPPs). Negative Outlook due to Liquidity Concerns: Urbis Negative Rating Outlook reflects the potential deterioration in its liquidity position should the current cash flow trends continue. The companys cash-to- short-term debt ratio is sufficient at 1.7x, but its CFFO plus cash-to-shortterm debt coverage is just 0.1x due to negative CFFO of MXN5.7 billion for the LTM to June 30, 2012.
Rating Outlooks
Financial Data
Urbi Desarrollos Urbanos, S.A. B. de C.V. (MXN Mil.) Revenue EBITDA EBITDAR Margin (%) FCF FCF Margin (%) Cash Short-Term Debt Total Debt Total Debt/ EBITDA (x) 6/30/12 16,592 4,475 27.0 (5,792) (34.9) 5,902 3,543 19,482 4.4 12/31/11 16,328 4,360 26.7 (4,070) (24.9) 5,529 6,445 14,921 3.4
Analysts
Jos Vrtiz +1 212 908-0641 jose.vertiz@fitchratings.com Indalecio Riojas +52 81 8399-9108 indalecio.riojas@fitchratings.com

FCF Generation Is the Main Rating Driver: The ratings are expected to be driven by the companys ability to generate FCF and trends in its liquidity. A negative rating action could be triggered by a deterioration of the companys credit ratios due to continued sizeable negative FCF. A continued negative FCF margin during the next few quarters similar to the levels observed during LTM to June 30, 2012 will likely result in a downgrade. An upgrade is not likely until the company reverses its current cash flow trends and lowers its leverage.
238
Corporates
Recovery Rating
Fitchs follows a liquidation scenario rather than a restructuring scenario (as a going concern) under its recovery analysis for Urbi with the assumption that it provides a higher recovery value to creditors. Under this scenario, Fitch applies the industrys standard discount rates to the companys cash, accounts receivable, inventories, and net PP&E of 0%, 80%, 55%, and 20%, respectively. The B/RR4 ratings of the companys unsecured public debt reflect average recovery prospects in the event of default. The recovery ratings are capped at RR4 due to the soft cap applied to the Mexican corporates under Fitchs criteria, and reflect the subordination of the public unsecured debt held at the holding company with respect to secured debt being held at the operating companies.
Recovery Analysis Urbi Desarrollos Urbanos, S.A.B. de C.V.s (Urbi)

(MXN Mil., As of June 30, 2012) Enterprise Value (As of June 30, 2012) EBITDA EBITDA Discount (%) Distressed EBITDA Market Multiple Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value by Priority Greater of Enterprise or Liquidation Value Less Administrative Claims Less Concession Payments Adjusted Value Amount Outstanding and Available R/C 15,940 4,474 40 2,684 3.5 9,395 21.6 15 36.6 24,123 2,412 0.0 21,710 Credit Ratings B B Cash Accounts Receivable Inventory PP&E, Net Total Balance Recovery Rates (%) 5,902 0 9,768 80 29,460 55 526 20 45,656 Available to Creditor 7,814 16,203 105 24,123 352.1 117.4 234.7 11.7 222.9
Issuer Default Rating Senior Unsecured
Recovery Rate (%) 100
RR Rating Capped/RR4
Notching 0
Source: Urbis financial statements and Fitch Ratings.
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Corporates
Urbis Organizational Structure
(MXN Mil., As of June 30, 2012)
Urbi IDR: B/Outlook Negative (Figures for the first six months of 2012) Consolidated Cash Stand-Alone Cash Consolidated Debt Stand-Alone Debt Consolidated EBITDA Stand-Alone EBITDA Consolidated Debt/EBITDA Consolidated Sales Consolidated Account Receivables (AR) Stand-Alone AR 6M12 Total Consolidated Units Sold 5,902 168 18,249 15,702 1,916 88 4.35 6,966 10,184 212 15,076
URBIs Main Operating Companies 99.99% 99.99% 99.99% 99.99% 99.99%
CYD/IOSA/PROMURBI (Combined) Cash % Total Cash Total Debt % Total Debt EBITDA % Total EBITDA ST Debt Sales % Total Sales AR %Total AR 6M 2012 Units Sales 3,796 64 2,547 14 1,624 85 1,853 6,063 87 9,220 91 11,945
CYD Cash % Total Cash Total Debt % Total Debt EBITDA % Total EBITDA ST Debt Sales % Total Sales AR %Total AR 6M 2012 Units Sales 1,627 28 1,321 7 564 29 1,063 2,532 36 3,362 33 4,291
IOSA Cash % Total Cash Total Debt % Total Debt EBITDA % Total EBITDA ST Debt Sales % Total Sales AR %Total AR 6M 2012 Units Sales 1,177 20% 1,043 6% 683 36% 647 2,055 30% 4,432 44% 3,911
PROMURBI Cash % Total Cash Total Debt % Total Debt EBITDA % Total EBITDA ST Debt Sales % Total Sales AR %Total AR 6M 2012 Units Sales 992 17% 183 1% 377 20% 143 1,476 21% 1,426 14% 3,743
Other Subs Cash % Total Cash Total Debt % Total Debt EBITDA % Total EBITDA ST Debt Sales % Total Sales AR %Total AR 6M 2012 Units Sales 1,938 33% 0% 204.5 11% 903 13% 752 7% 3,131
URBI: CYD: IOSA: PROMURBI: ORDURBI: TEC: PROMSA: METRO: PACIFICO: FINURBI: ARMMED: CODEO: HEROF: DEMEX: LUFRO: PACMEX: Source: Urbi.
Urbi Desarrollos Urbanos, S.A.B. de C.V. (parent company) Cyd Desarrollos Urbanos, S.A. de C.V. Ingenieria y Obras, S.A. de C.V. Promocion y Desarrollos Urbi, S.A. de C.V. Obras y Desarrollos Urbi, S.A. de C.V. Tec Diseo e Ingenieria, S.A. de C.V. Propulsora Mexicana de Parques Industriales, S.A. de C.V. Constructora Metropolitana Urbi, S.A. de C.V. Urbi Construcciones del Pacifico S.A. de C.V. Financiera Urbi, S.A. de C.V., Sofom, ENR Desarrolladora Armmed Norte, S.A. de C.V. Constructora y Desarrolladora del Occidente, S.A. de C.V. Herof Desarrolladora del Sur, S.A. de C.V. Desarrolladora Mex-Centro, S.A. de C.V. Lufro Desarrolladora del Bajio, S.A. de C.V. Inmobiliaria y Constructora Pac-Mex, S.A. de C.V.
Main Subsidiaries:
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Corporates
Debt and Covenant Synopsis Urbi Desarrollos Urbanos, S.A. B. de C.V.
Overview Issuer Subsidiary Guarantors URBI, Desarrollos Urbanos, S.A.B. de C.V. The payment of principal, interest and premium on the notes will be fully and unconditionally guaranteed on a senior unsecured basis by Ingeniera y Obras, S.A. de C.V., Obras y Desarrollos Urbi, S.A. de C.V., Cyd Desarrollos Urbanos, S.A. de C.V., Tec Diseo e Ingeniera S.A. de C.V., Promocin y Desarrollos Urbi, S.A. de C.V., Propulsora Mexicana de Parques Industriales, S.A. de C.V., Urbi Construcciones del Pacfico, S.A. de C.V., Constructora Metropolitana Urbi, S.A. de C.V. and Financiera Urbi, S.A. de C.V., Sofom E.N.R., which collectively held approximately 99% of the companys total assets and accounted for approximately 99% of the companys EBITDA as of June 30, 2012. April 19, 2006 April 19, 2016 International Senior Unsecured Guaranteed Notes USD150 Mil. Jan. 19, 2010 Jan. 19, 2020 International Senior Unsecured Guaranteed Notes USD300 Mil. Jan. 27, 2012 Feb. 3, 2022 International Senior Unsecured Guaranteed Notes USD500 Mil. Dec. 9, 2011 Dec. 9, 2014 Local Certificados Bursatiles (CBs) Senior Unsecured Guaranteed Notes MXN 600 Mil.
Issuances Document Date Maturity Date Description of Debt
Amount Main Characteristics Ranking
The following is a summary of the main characteristics included in the indentures governing the above-indicated international and local issuances. The international and local unsecured guaranteed notes will rank equally with the companys existing and future senior unsecured indebtedness. Certain of the companys subsidiaries will fully and unconditionally guarantee the notes on a senior basis. Each guarantee will be unsecured and rank equally with all existing and future senior unsecured indebtedness of the subsidiary guarantors. The notes will also be effectively subordinated to the companys and the subsidiary guarantors secured indebtedness to the extent of the value of the assets securing such indebtedness. The notes and guarantees will be structurally subordinated to the indebtedness (including trade payables) of existing and future nonguarantor subsidiaries. The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, incur any indebtedness, including acquired Indebtedness, except that the company and any subsidiary guarantor may incur indebtedness, including acquired indebtedness, if, at the time of and immediately after giving pro forma effect to the Incurrence thereof and the application of the proceeds therefrom, the consolidated fixed charge coverage ratio of the company is greater than 2.0 to 1.0. Notwithstanding clause above, the company and its restricted subsidiaries, as applicable, may incur in additional Indebtedness under certain circumstances. Upon the occurrence of a change of control, each holder will have the right to require that the company purchase all or a portion (in minimum principal amounts of USD200,000 and integral multiples of USD1,000 in excess thereof) of the holders notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest thereon through the date of purchase. The company will not permit any restricted subsidiary of the company that is not a subsidiary guarantor to guarantee any indebtedness of the company or a subsidiary guarantor or to secure any Indebtedness of the company or a subsidiary guarantor with a lien (other than permitted liens) on the assets of such restricted subsidiary, unless contemporaneously therewith (or prior thereto) effective provision is made to guarantee or secure the notes on an equal and ratable basis with such guarantee or lien for so long as such guarantee or lien remains effective, and in an amount equal to the amount of indebtedness so guaranteed or secured. Any guarantee by any such restricted subsidiary of subordinated indebtedness of the company or a subsidiary guarantor will be subordinated and junior in right of payment to the contemporaneous guarantee of the notes by such restricted subsidiary.
Financial Covenants Limitation on Incurrence of Additional Indebtedness
Acquisitions/Divestitures Change of Control Provision
Limitations on Guarantees
Others Limitation on Asset Sales and Sales of Subsidiary Stock The company will not, and will not permit any of its restricted subsidiaries to, consummate an asset sale unless: (a) the company or the applicable restricted subsidiary, as the case may be, receives consideration at the time of such asset sale at least equal to the fair market value of the assets or capital stock sold or otherwise disposed of, and (b) at least 75% of the consideration received for the assets or capital stock sold by the company or the restricted subsidiary, as the case may be, in such asset sale shall be in the form of cash or cash equivalents received at the time of such asset sale. Limitation on Dividend and Other The company will not, and will not cause or permit any of its restricted subsidiaries to, directly or indirectly, create or otherwise cause Payment Restrictions Affecting or permit to exist or become effective any encumbrance or restriction on the ability of any restricted subsidiary to: (1) pay dividends or Restricted Subsidiaries make any other distributions on or in respect of its capital stock to the company or any other restricted subsidiary or pay any Indebtedness owed to the Company or any other restricted subsidiary; (2) make loans or advances to, or guarantee any Indebtedness or other obligations of, or make any Investment in, the company or any other restricted subsidiary; or (3) transfer any of its property or assets to the company or any other restricted subsidiary. The paragraph above will not apply to encumbrances or restrictions existing under certain circumstances. Limitation on Merger, The company will not, in a single transaction or series of related transactions, consolidate or merge with or into any person (whether Consolidation and Sale of Assets or not the company is the surviving or continuing person), or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any restricted subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the companys properties and assets (determined on a consolidated basis for the company and its restricted subsidiaries), to any person unless the company shall be the surviving or continuing person, or under other specific circumstances. Source: Urbi Desarrollos Urbanos, S.A.B. de C.V. and Fitch Ratings.
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Corporates
Financial Summary Urbi Desarrollos Urbanos, S.A.B. de C.V.
(MXN 000) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin Operating EBITDAR Margin FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Operating Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other Financing, Net Total Change in Cash Income Statement Net Revenues Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Source: Company reports. 2008 4,149,619 4,149,619 27.66 27.66 16.16 (18.00) 15.45 3.10 3.53 3.53 1.05 1.05 3.10 0.13 (24.00) 1.96 1.72 1.24 1.72 1.24 18.50 0.39 30,143,419 1,985,498 2,760,496 4,377,368 7,137,864 7,137,864 7,137,864 15,413,509 22,551,373 2,468,190 (5,000,222) (2,532,032) (107,325) (2,639,357) 1,225,773 7,457 (1,406,127) 15,003,984 17.41 3,937,560 1,177,043 2,203,794 2009 4,132,061 4,132,061 30.16 30.16 15.32 10.98 10.54 3.04 3.80 3.80 0.84 0.84 3.04 0.52 1.41 20.76 2.38 1.91 0.84 1.91 0.84 14.50 0.49 31,414,129 4,389,122 3,855,227 4,018,093 7,873,320 7,873,320 7,873,320 13,709,110 21,582,430 2,218,929 (638,436) 1,580,493 (76,140) 1,504,353 58,228 817,375 27,668 2,407,624 13,700,442 -9 2,905,220 1,088,568 1,534,223 2010 4,066,580 4,066,580 27.15 27.15 13.37 (3.00) 11.33 2.72 3.09 3.09 0.89 0.89 2.72 0.18 1.50 (2.00) 3.07 2.70 1.22 2.70 1.22 13.97 0.30 37,068,785 6,019,226 3,248,926 7,727,169 10,976,095 10,976,095 10,976,095 15,770,549 26,746,644 2,258,250 (2,588,219) (329,969) (162,204) (492,173) (130,662) 2,395,332 (11,024) 1,761,473 14,976,836 9.32 3,788,925 1,316,604 1,670,323 2011 4,360,899 4,360,899 26.71 26.71 8.48 (25.00) 14.22 2.34 3.63 3.63 0.57 0.57 2.34 0.35 (24.00) 5.32 3.42 2.15 3.42 2.15 9.28 0.43 43,060,731 5,529,279 6,444,865 8,476,704 14,921,569 14,921,569 14,921,569 18,174,166 33,095,735 1,604,314 (5,510,634) (3,906,320) (163,311) (4,069,631) 557,926 2,911,734 (25,345) (625,316) 16,327,800 9.02 4,213,690 1,201,419 2,414,032 LTM 6/30/12 4,474,439 4,474,439 26.97 26.97 6.71 (35.00) 11.38 2.15 3.78 3.78 0.95 0.95 2.15 (1.00) 0.27 (51.00) 7.64 4.35 3.04 4.35 3.04 7.15 0.18 48,420,848 5,902,428 3,542,899 15,940,099 19,482,998 19,482,998 19,482,998 18,543,970 38,026,968 1,366,874 (7,048,194) (5,681,320) (110,439) (5,791,759) 588,681 3,467,262 41,078 (1,694,738) 16,591,914 4.28 4,317,907 1,184,265 1,985,476
242
Corporates
Virgolino de Oliveira S.A. Acar e lcool
Full Rating Report
Ratings
Virgolino de Oliveira S.A. Accar e lcool Foreign Currency Long-Term IDR B
Key Rating Drivers

High Leverage: Virgolino de Oliveira S.A. Acar e lcools (GVO) ratings reflect its high leverage and tight liquidity position. For the LTM ended on April 30, 2012, GVOs consolidated net adjusted debt/EBITDAR ratio, considering dividends received from Copersucar, was 5.0x, slightly above Fitchs expectations of between 4.3x and 4.5x for this period. This increased leverage resulted from pressure on free cash flow (FCF) due to higher capital expenditures during the last harvest, including crop expansion. The strong U.S. dollar versus the Brazilian real also had a negative impact on foreign exchange variation and GVOs debt. Strengthened Business Profile: GVOs strategic shareholding in Copersucar (10.36% of its total capital) fundamentally supports its ratings and mitigates the risks derived from its middletier business position within the industry. GVO transfers 100% of its production to Copersucar, through a long-term exclusivity contract, mitigating demand risk. Prices are linked to the average sugar and ethanol market prices plus a premium, which is possible due to logistics savings and scale gains obtained through the partnership with Copersucar. GVO is remunerated by Copersucar based on the realized production (on a monthly basis) during the year, independently of the moment the sale to the final customer occurs. Weak but Improving Liquidity: GVOs liquidity remains weak despite the long-term bond issued in February 2012. As of April 30, 2012, the group reported a cash position of BRL406 million, which covered only 64% of its short-term adjusted debt. Partially mitigating refinancing risk, GVOs financial profile benefits from a significant working capital financing line in the amount of up to 40% of its annual revenues, equivalent to approximately BRL400 million, granted by Copersucar. This credit line is subject to certain limits in terms of revenues, and it is linked to guarantees on inventories and/or bank guarantees. Adequate Business Model: GVOs business profile is positive, based on the favorable location of its mills, its diversified production base, and operational flexibility. The group consists of four industrial units located in the State of So Paulo, conveniently located near the main consumer markets and export channels. GVO has an installed crushing capacity for 12 million tons of sugar cane, with flexibility to reach up to 60% of total capacity for sugar or ethanol. The group benefits from sugar cane supply from its own and leased land for around 54% of its needs. The remaining 46% is supplied by third parties through long-term contracts, and there is no supply concentration above 5%. Industry Risks: The high volatile sugar and ethanol industry fundamentals; exposure to climatic conditions;, and challenges related to the ethanol industrys dynamics in Brazil, currently strongly linked to gasoline regulated prices and government policies related to this issue, are further considered in the ratings.
Local Currency Long-Term IDR B National Scale Long-Term BBB(bra) First Debenture Issuance due 2014 BBB(bra) Virgolino de Oliveira Finance S.A. Foreign Currency Long-Term IDR Local Currency Long-Term IDR USD300 Million Senior Unsecured Notes IDR Issuer default rating. B B B/RR4
Rating Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR Stable Stable
Financial Data
Virgolino de Oliveira S.A. Accar e lcool (BRL Mil.) Net Revenues EBITDA EBITDA Margin (%) Funds from Operations Total Debt Total Adjusted Debta Cash and Equivalents Total Debt/ EBITDA (x) Net Debt/ EBITDA (x) Total Adjusted Debt/ EBITDAR (x) Net Adjusted Debt/ EBITDAR + Dividends (x) 4/30/12 1,053 323 30.7 144 2,181 2,514 406 6.7 5.5 6.4 5.0 4/30/11 1,015 265 26.1 305 1,393 1,616 86 5.3 4.9 5.2 4.8
a Including off-balance obligations related to leased land (period of 12 months).
Analysts
Renata Pinho +55 11 4504-2207 renata.pinho@fitchratings.com Gisele Paolino +55 21 4503-2624 gisele.paolino@fitchratings.com

Lower Cash Flow Generation: Negative rating actions could be driven by lower than expected operational cash flow generation or deterioration of GVOs operating margins. Deleveraging Movement: Improvement in the groups liquidity position coupled with a better balanced debt maturity profile and lower leverage levels could lead to a positive rating action.
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Corporates
Recovery Rating
Fitch has performed a liquidation analysis for GVO in the event of bankruptcy. Fitch has also estimated the enterprise valuation in the event of financial distress. Under this scenario, we assumed a multiple of 5 times for the EBITDAR. Secured debt included debt from the Brazilian Economic and Social Development Bank (BNDES) and part of the groups outstanding export financing transactions, which count on real guarantees. Fitch also conservatively assumed as secured debt part of the loans provided by Copersucar, which was equivalent to the inventories position reported in April 2012 (BRL111 million) since these loans are always backed by inventories/receivables or bank guarantees. The analysis suggests a higher recovery level of RR2 for GVOs unsecured debt. The rating has been capped at RR4, which is the recovery rating cap for Brazilian issuers. The cap reflects concerns about the bankruptcy laws and the application of the law. GVOs resulting recovery rating of RR4 indicates that the companys creditors would have average recovery prospects in the range of 31%50% of current principal and related interest in the event of default.
Recovery Analysis Virgolino de Oliveira S.A. Acar e lcool

(BRL Mil.) IDR: B Liquidation Value Cash Accounts Receivable Inventory Net PPE Total Advance Available to Rate (%) Creditors 0 80 13 50 56 20 375 445 Going Concern Enterprise Value LTM EBITDAR as of April 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Lien 498 Value Recovered 498 Recovery (%) 100 Recovery Rating RR1 Notching +3 Rating BB 390 0 390 5.0 1,949 406 17 111 1,877 2,411
(263) (67) (100) (430)
1,949 195 1,754
1,754 498 1,257 63 1,194 Value Recovered 1,257 Recovery (%) 75 Concession Allocation (%) 100 Recovery Rating RR4
Unsecured Priority Senior Unsecureda
Lien 1,683
Notching 0
Rating B
Note: Numbers may not add due to rounding. Source: Virgolino de Oliveira S.A. Acar e lcool.
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Corporates
Organizational Structure Virgolino de Oliveira Group
(As of April 30, 2012)
Oliveira Family
100%
38.22%
Agropecuria Nossa Senhora do Carmo S.A.

61.78%
Virgolino de Oliveira S.A. Acar e lcool
99.85%
99.35%
99.94%
100%
Agropecuria Virgolino de Oliveira S.A.
Aucareira Virgolino de Oliveira S.A.
Agropecuria Terras Novas S.A.
Virgolino de Oliveira Finance S.A.
Source: Virgolino de Oliveira S.A.
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Corporates
Debt and Covenant Synopsis Virgolino de Oliveira Finance S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Amounts Financial Covenants Limitation on Indebtedness Virgolino de Oliveira Finance S.A. (Luxembourg) Agropecuria Nossa Senhora do Carmo S.A., Virgolino de Oliveira S.A. Acar e lcool, Acucareira Virgolino de Oliveira S.A. And Agropecuria Terras Novas S.A. Feb. 2, 2012 Feb. 9, 2022 Senior Unsecured Notes USD300 million Net leverage lower than 4.0x and 3.5x going forward. The company or restricted subsidiaries may not incur in additional debt if the net debt-to- EBITDA ratio is greater than 4.0 to 1.0 between the closing date and Oct. 31, 2012, inclusive, and 3.5 to 1.0 after Nov. 1, 2012. The issuer shall not, so long as any of the notes are outstanding, (1) engage in any business or enter into, or be party to, any transaction or agreement, with certain exceptions; (2) acquire or own any subsidiary or other assets or properties, with certain exceptions and (3) incur or suffer to exist any lien upon any properties or assets whatsoever, except (a) liens imposed by law and (b) any liens that in the aggregate are not material to the issuer. In addition, Agropecuria Nossa Senhora do Carmo S.A. must own, directly or indirectly, at least 75% of the shares of the issuer. Virgolino de Oliveira Finance Limited (Cayman Islands) Agropecuria Nossa Senhora do Carmo S.A., Virgolino de Oliveira S.A. Acar e lcool, Acucareira Virgolino de Oliveira S.A. And Agropecuria Terras Novas S.A. Jan. 21, 2011 Jan. 28, 2018 Senior Unsecured Notes USD300 million Net leverage lower than 4.0x and 3.5x going forward. The company or restricted subsidiaries may not incur in additional debt if the net debt-to-EBITDA ratio is greater than 4.5 to 1.0 between the closing date and October 31, 2011, 4.0 to 1.0 between Nov. 1, 2011 and Oct. 31, 2012, and 3.5 to 1.0 after Nov. 1, 2012. The issuer shall not, so long as any of the notes are outstanding, (1) engage in any business or enter into, or be party to, any transaction or agreement, with certain exceptions; (2) acquire or own any subsidiary or other assets or properties, with certain exceptions and (3) incur or suffer to exist any lien upon any properties or assets whatsoever, except (a) liens imposed by law and (b) any liens that in the aggregate are not material to the issuer. In addition, Agropecuria Nossa Senhora do Carmo S.A. must own, directly or indirectly, at least 75% of the shares of the issuer. The company and any restricted subsidiary will not permit to issue or assume any indebtedness secured by a lien upon any property or assets without effectively providing that the notes shall be secured equally and ratable with such indebtedness so long as it shall be so secured. The company will not and will not permit any restricted subsidiary to enter into any sale and Leaseback transaction, unless certain conditions are met. The company and any restricted subsidiary will not make any asset disposition unless some conditions are met, including, among others: (1) the asset disposition is for fair market value, (2) within 365 days after the receipt of any net available cash, proceeds may be used to permanently repay indebtedness, other than subordinated obligations; to acquire all or substantially all of the assets of a related business or to make capital expenditures. Net cash available not applied as per item (2) shall constitute Excess Proceeds and in case the latter reaches the issuer shall, within 30 days, make an offer to purchase notes, respecting certain conditions.
Issuer Provisions Limitations with Respect to the Issuer
The company and any restricted subsidiary will not permit to issue or assume any indebtedness secured by a lien upon any property or assets without effectively providing that the notes shall be secured equally and ratable with such indebtedness so long as it shall be so secured. Limitation on Sale and Leaseback The company will not and will not permit any restricted subsidiary to Transactions enter into any sale and leaseback transaction, unless certain conditions are met. Acquisitions/Divestitures Limitations on Sales of Assets or The company and any restricted subsidiary will not make any asset Shares disposition unless some conditions are met, including, among others: (1) the asset disposition is for fair market value, (2) within 365 days after the receipt of any net available cash, proceeds may be used to permanently repay indebtedness, other than subordinated obligations; to acquire all or substantially all of the assets of a related business or to make capital expenditures. Net cash available not applied as per item (2) shall constitute excess proceeds and in case the latter reaches the issuer shall, within 30 days, make an offer to purchase notes, respecting certain conditions. Dividends and other Payment Restrictions Limitation on Dividend and Other With certain exceptions, the company will not, and will not permit any Payment Restrictions Affecting restricted subsidiary, to create or permit to exist any consensual Restricted Subsidiaries encumbrance or restriction on the ability of any restricted subsidiary to (1) pay dividends or make any other distributions on the capital stock of the restricted subsidiary owned by the company, to the company, or any restricted subsidiary; (2) to pay any indebtedness owed to the company or any restricted subsidiary; (3) make loans or advances to the company or any restricted subsidiary; or (4) transfer any of its properties or assets to the company or any restricted subsidiary.
Debt Restrictions Limitation on Liens
With certain exceptions, the company will not, and will not permit any restricted subsidiary, to create or permit to exist any consensual encumbrance or restriction on the ability of any restricted subsidiary to (1) pay dividends or make any other distributions on the capital stock of the restricted subsidiary owned by the company, to the company, or any restricted subsidiary; (2) to pay any indebtedness owed to the company or any restricted subsidiary; (3) make loans or advances to the company or any restricted subsidiary; or (4) transfer any of its properties or assets to the company or any restricted subsidiary. The company will not, and will not permit any restricted Limitation on Restricted The company will not, and will not permit any restricted subsidiary, subsidiary, directly or indirectly, to (1) declare or pay any Payments directly or indirectly, to (1) declare or pay any dividend except dividend except dividends or distributions payable solely in the dividends or distributions payable solely in the form of its capital form of its capital stock and except dividends or dividends stock and except dividends or dividends payable to the company or payable to the company or restricted subsidiary (on a pro rata restricted subsidiary (on a pro rata basis); (2) purchase or redeem basis); (2) purchase or redeem any capital stock of the any capital stock of the company held by persons other than the company held by persons other than the company or restricted company or restricted subsidiary (except for permitted investment); (3) purchase, acquire, or retire for value, prior to scheduled maturity, subsidiary (except for permitted investment); (3) purchase or acquire or retire for value, prior to scheduled maturity, any any subordinated obligations, with certain exceptions and (4) make subordinated obligations, with certain exceptions and (4) make any investment (other than permitted) in any person. any investment (other than permitted) in any person. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Continued on the next page. Source: Company and Fitch Ratings.
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Corporates
Debt and Covenant Synopsis Virgolino de Oliveira Finance S.A. (Continued)
(Foreign Currency Notes) With certain exceptions, the issuer will not, and will not permit any With certain exceptions, the issuer will not and will not permit restricted subsidiary, to make any payment, or sell, lease, transfer or any restricted subsidiary, to make any payment, or sell, lease, dispose of any of its properties or assets or enter into any transaction transfer or dispose of any of its properties or assets or enter or contract for the benefit of any affiliate. into any transaction or contract for the benefit of any affiliate. Consolidation, Merger, With certain exceptions, the company will not consolidate with or With certain exceptions, the company will not consolidate with Conveyance, Sale, or Lease merge into another person or convey, transfer or lease all or or merge into another person or convey, transfer or lease all or substantially all of its assets to any person. substantially all of its assets to any person. Cross Acceleration Cross acceleration of other debt with a USD15 million threshold. Cross acceleration of other debt with a USD15 million threshold. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings. Others Limitation on Transactions with Affiliates
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Corporates
Financial Summary Virgolino de Oliveira S.A. Acar e lcool
(BRL Mil., As of April 30) Profitability Operating EBITDA Operating EBITDAR Operating EBITDA Margin (%) Operating EBITDAR Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDAR/Interest Expense + Rents Operating EBITDA/Debt Service Coverage Operating EBITDAR/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Total Adjusted Debt/Operating EBITDAR Total Adjusted Net Debt/Operating EBITDAR Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income N.A. Not applicable. Source: Fitch. LTM 4/30/12 323,117 389,817 30.7 37.0 16.5 (18.0) (20.0) 1.5 1.2 1.2 0.4 0.4 1.4 0.1 0.5 0.4 5.3 6.7 5.5 6.4 5.4 0.1 0.3 2,773,214 405,746 635,079 1,545,501 2,180,580 2,180,580 333,500 2,514,080 364,979 2,879,059 143,781 (10,567) 133,214 (323,087) (189,873) 28,381 481,640 N.A. 320,148 1,052,795 4 126,817 263,465 66,700 (86,901) 2011 264,549 309,098 26.1 30.5 28.3 4.7 12.7 2.2 1.1 1.0 0.4 0.4 2.0 0.4 0.6 1.2 2.7 5.3 4.9 5.2 5.0 0.2 0.3 2,268,347 85,598 429,871 963,185 1,393,056 1,393,056 222,745 1,615,801 502,519 2,118,320 304,713 (37,716) 266,997 (219,761) 47,236 9,522 (11,509) N.A. 45,249 1,014,544 (2) 204,044 249,891 44,549 59,297 2010 311,891 359,391 30.1 34.7 22.3 10.5 3.6 1.9 1.6 1.5 0.4 0.4 1.7 0.4 0.5 1.9 3.5 4.0 3.8 4.1 4.0 0.2 0.5 2,233,871 40,349 574,102 666,697 1,240,799 1,240,799 237,500 1,478,299 432,577 1,910,876 179,630 55,240 234,870 (125,938) 108,932 4,015 (183,702) N.A. (70,755) 1,036,728 57 184,091 198,555 47,500 15,625 2009 94,788 127,572 14.3 19.3 10.7 (17.0) (19.6) N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 0.5 7.2 13.9 12.7 11.6 10.7 N.A. 0.5 2,320,134 111,104 627,221 685,648 1,312,869 1,312,869 163,920 1,476,789 441,910 1,918,699 172,312 (47,234) 125,078 (237,295) (112,217) (20) 108,958 23,761 20,482 661,856 66 33,813 N.A. 32,784 (68,727) 2008 62,446 88,846 15.6 22.3 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. 0.2 N.A. 16.6 15.1 14.0 13.0 N.A. 0.4 1,425,181 90,622 415,258 618,515 1,033,773 1,033,773 211,200 1,244,973 260,051 1,505,024 143,781 (10,567) 133,214 (323,087) (189,873) 28,381 481,640 N.A. N.A. 399,267 N.A. 2,636 N.A. 26,400 (46,574)
248
Corporates
WPE International Cooperatief (WPEI)
Full Rating Report
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR IDR Issuer default rating. B+ B+/RR4 B+
Key Rating Drivers

Ratings Based on Guarantors Creditworthiness: WPE International Coorperatief (WPEI) is a direct subsidiary of WPE, which in turn is wholly owned by Industrias Metalurgicas Pescarmona (IMPSA). WPEIs notes are irrevocably and unconditionally guaranteed by IMPSA and WPE (IMPSAs Brazilian subsidiary) on a senior unsecured basis. The ratings reflect the creditworthiness of IMPSA, which is rated B+. WPE is a fully owned subsidiary of IMPSA with strong operating, strategic, and financial ties to its parent company. The B+ IDR assumes all of WPEIs future debt issuances would be guaranteed by IMPSA and will rank pari passu with IMPSAs senior unsecured debt. IMPSAs Positive Business Fundamentals: IMPSAs B+ ratings reflect the positive trend for the companys business fundamentals due to sustained global demand for hydro and wind power generating equipment. As of June 30, 2012, IMPSAs backlog was USD3.6 billion. Approximately 79% of the backlog is in wind manufacturing, and 43% of these projects are in Brazil. This backlog level shows an improvement from USD3.16 billion during January 2011. The growth of IMPSAs business in Brazil has reduced its exposure to more volatile markets such as Argentina and has increased its access to multiple funding sources. This has enabled IMPSAs foreign currency rating to exceed the B country ceiling of Argentina. Backlog Concentration Heightens Risk: IMPSAs backlog concentration is high with five projects representing 56% of total backlog. The main project in the hydro equipment business unit is the Belo Monte hydro project in Brazil, whereas the main projects in the wind equipment unit are Arauco IV (Argentina) and Ceara III (Brazil). Negative Free Cash Flow: The companys free cash flow (FCF) is anticipated to remain negative during 2012 and 2013 due to capital expenditures and growing working capital needs. Investments in the construction of wind farms are estimated at approximately USD450 million for FYE 2012 and USD560 million for FYE 2013. Much of the cash deficit will be funded with nonrecourse project financing for the wind farm projects in Brazil.
Rating Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR Stable Stable
Financial Data
Industrias Metalurgicas Pescarmona S.A.I.C y F. 6/30/12 12/31/11 (USD Mil.) (6 Months) (11 Months) Revenue 451.6 1,150.5 EBITDA Cash Flow from Operations Cash and Marketable Securities Total Recourse Debt Total Recourse Debt/EBITDA (x) Net Recourse Debt/EBITDA (x) 107.6 (143.8) 60.8 957.8 4.6 4.3 200.0 (318.0) 95.8 835.4 3.8 3.4
Note: IMPSA changed to IFRS since April 2011 and changed the fiscal year end to December. Figures as of December 2011 are for eleven months and as of June 2012 are for six months. Ratios have been calculated by annualizing income statement and cash flow items of eleven months and six months, respectively.

Changes in Financing Strategy: The ratings could be downgraded or have a negative outlook assigned if recourse financing increases above levels anticipated by Fitch, or if IMPSA changes its existing strategy of financing the development of wind farms with nonrecourse, project finance debt. Operating Issues: Any material performance problems that threaten future projects and cash flow, or a failure to comply with the terms for the operation of the wind farms (for which longterm PPAs have been signed with Eletrobras and the CCEE and are financed by BNDES), could also result in a Negative Outlook or downgrade. A sharp demand for wind farms would also be negative.
Analysts
249
Corporates
Recovery Rating
The recovery ratings for IMPSAs capital markets debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery anticipated to be in the range of 30%50%, which is consistent with Fitchs RR4. Fitch discounts the companys LTM EBITDA to a level that would cover operating leases, interest expenses, and maintenance capital expenditures. Fitch has applied a 4.0x distressed EBITDA multiple, which is slightly below the average ratio observed for many companies involved in diversified manufacturing and capital goods.
Recovery Analysis Industrias Metalurgicas Pescarmona S.A.I.C. y F

(USD Mil.) Available to Creditors 41.2 66.0 45.0 152.1 Going Concern Enterprise Value June 2012 Annualized EBITDA Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Estimated Maintenance Capital Expenditures Total Enterprise Value for Claims Distribution Greater of Going Concern Enterprise or Liquidation Value Less Administrative Claims (10%) Adjusted Enterprise Value for Claims Distribution of Value Secured Priority Secured Lien 0.0 Value Recovered Recovery (%) 0 Concession Allocation (%) 100 Recovery Rating Recovery Rating RR4 Notching Rating Liquidation Value Cash A/R Inventory Net PPE Total Advance Rate (%) 0 80 50 20
215.2 40 129.1 4.0 516.5 135.8 20.0 155.8 516.5 51.6 464.8
60.8 51.5 131.9 224.9 469.1
Concession Payment Availability Table Adjusted Enterprise Value for Claims Less Secured Debt Recovery Remaining Recovery for Unsecured Claims
464.8 464.8
Lien 957.8
Value Recovered Recovery (%) 464.8 49
Notching
Rating B+
250
Corporates
Organizational Structure WPE International Cooperatief

June 2012 Summary Statistics
USD107.6 Million of EBITDA (6 Months) USD60.8 Million of Cash and Marketable Securities USD1,343 Million of Total Debt USD958 Million of Total Debt with Recourse
Industrias Metalrgicas Pescarmona S.A.I.C. y F.
100% Inverall Constr. S.A. (Brazil)
100% WPE (Brazil)
Guaranteed
55% Energimp (Brazil) 45% FI-FGTS
100% Venti Energia (Brazil)
100% WPE International Cooperatief (Netherlands) USD390 Million Senior Unsecured Notes Due 2020
Source: Fitch and Industrias Metalrgicas Pescarmona S.A.I.C. y F.
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Corporates
Debt and Covenant Synopsis WPE International Cooperatief
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change of Control Provision Restricted Payments WPE International Cooperatief Industrias Metalurgicas Pescarmona and Wind Power Energia (WPE) Sept. 30, 2010 2020 Senior Guaranteed Notes N.A. N.A. Change of control clause at 101% of principal. The company will not declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities, or a combination thereof, with respect to any shares of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value any shares of any class of its capital stock or set aside any amount for any such purpose, except for transactions in connection with the financing, directly or indirectly, of the guarantors and their subsidiaries from the net proceeds of the issuance of notes under the indenture and incidental and related activities, including any related swap transactions. The company will not engage at any time in any business or business activity other than the financing, directly or indirectly, of the guarantors and their respective subsidiaries from the net proceeds of the issuance of notes under the indenture and incidental and related activities, including any related swap transactions or holding investments in marketable securities, except as the trustee may otherwise approve if so directed by the holders of not less than 25% of the principal amount of the outstanding notes issued under the indenture. The company will not and will not permit any restricted subsidiary to incur in any indebtedness. Exceptions are: 1) on the date of such incurrence, the interest coverage ratio would be no less than 2x and total debt to EBITDA no greater than 4x; 2) no default or event of default shall have occurred. This covenant does not prohibit the incurrence of the following debt: 1) intercompany indebtedness within certain restrictions; 2) indebtedness represented by the notes, or outstanding on the issue date, or consisting on refinancing indebtedness; 3) hedging obligations; 4) subordinated indebtedness; 5) debt in an aggregate principal amount not exceeding USD50 million; 6) short-term debt for the ordinary course of business not exceeding USD40 million during the first year after the issuance, USD20 million prior to the second anniversary, and USD10 million thereafter; 7) debt in addition to that referred on 1 not exceeding USD100 million/USD75 million (year one from covenant changes as of May 2011)/USD50 million (year two)/USD25 million thereafter. The company will not and will not permit any of its restricted subsidiaries to: 1) declare or pay any dividend other than: a) dividends paid in shares of its common stock, b) dividends paid on a pro rata basis of the holders of such common stock; 2) purchase, redeem, or acquire any capital stock of the company or subsidiaries; 3) purchase, redeem, or retire for value, prior to scheduled maturity, any debt which is subordinated to the notes; 4) make any investments other than permitted investments. The company will not and will not permit any of the restricted subsidiaries to assume any lien (except for permitted ones) upon its property, unless at the same time the obligations under the notes are secured equally. The company will not and will not allow its restricted subsidiaries to enter into a transaction with affiliates, unless: 1) the transaction is on terms that are no less favorable than those that would have been obtained in a comparable transaction with a person that is not an affiliate; 2) the company delivers to the trustee: a) for transactions in excess of USD10 million, a resolution from its board of directors, b) for transactions in excess of USD15 million an opinion as to the fairness of that transaction from a financial point of view, issued by an international investment bank. The company or its restricted subsidiaries will not enter into any sale and lease back transactions unless pursuant to the provisions of the covenant described under Limitation on Indebtedness.
Other Limitation on Business Activity
Other, Relating to the Guarantors Additional Debt Restriction
Restricted Payments
Limitation on Liens Transactions with Affiliates
Sale and Leaseback Transactions
252
Corporates
(USD 000, Fiscal Year Ended Jan. 31 until January 2011; Dec. 31 since December 2011) Period-End Exchange Rate Average Exchange Rate 4.5238 4.4110 6 Months 6/30/12 Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed Charge Coverage FCF Debt Service Coverage (Free Cash Flow + Cash and Marketable Securities)/Debt Service Cash Flow from Operations/Capital Expenditures Capital Structure and Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds Secured Debt/Total Debt Short-Term Debt/Total Debt Debt with Recourse/EBITDA Net Debt with Recourse/EBITDA Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Debt with Recourse Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Other, Financing Activities Total Change in Cash Income Statement Net Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income Note: Numbers may not add due to rounding. Source: Industrias Metalrgicas Pescarmona S.A.I.C. y F. and Fitch. 107,609 24.12 0.57 1.60 0.46 0.57 (0.46) (0.33) 18.06 6.40 6.11 10.13 0.24 4.56 4.27 2,017,386 60,776 324,164 1,019,227 1,343,391 1,343,391 0 1,343,391 957,792 132,297 1,475,687 (29,269) (114,552) (143,820) 0 (33,772) 0 (177,592) 0 (1,824) 146,663 0 (32,752) 451,599 89,913 67,875 0 (13,995) 4.3053 4.1295 11 Months 12/31/11 200,048 17.39 (1.74) 2.68 0.64 (1.74) (0.94) (0.65) (8.47) 5.50 5.06 6.79 0.22 3.83 3.39 1,957,000 95,892 258,746 941,875 1,200,621 1,200,621 0 1,200,621 835,446 157,406 1,358,028 (204,742) (113,328) (318,070) 0 (48,461) 0 (366,531) 0 (1,644) 415,751 0 47,576 1,150,532 169,350 74,735 0 47,858 3.9787 3.9134 2011 183,805 18.10 (10.70) (26.70) 41.70 (2.00) 3.20 0.80 (2.00) (0.90) (0.70) (3.20) (7.60) 4.60 4.30 8.00 0.20 3.49 3.20 1,508,993 53,313 169,816 677,041 846,857 846,857 0 846,857 633,021 180,091 1,026,948 (169,477) (36,434) (205,911) 0 (64,765) 0 (270,676) 0 159 261,562 0 (8,955) 1,012,939 65.8 160,540 57,312 0 60,963 3.8340 3.7990 2010 102,070 16.70 0.20 (4.80) 4.00 0.00 1.60 0.60 0.00 0.20 0.50 (0.70) 442.00 5.60 5.00 10.80 0.20 4.30 3.69 1,004,844 62,417 115,200 461,229 576,429 576,429 0 576,429 438,803 110,700 687,129 (60,750) 48,580 (12,170) 0 (17,051) 0 (29,221) (19,967) 15,631 20,545 0 (13,012) 610,964 27.7 87,098 62,054 0 4,287 3.4855 3.1900 2009 107,150 22.40 7.80 (51.30) 7.50 1.20 2.30 0.70 1.20 (1.30) (0.70) (6.30) 10.00 5.40 4.50 9.40 0.20 4.20 2.97 909,189 92,969 110,774 464,776 575,550 575,550 0 575,550 411,704 102,638 678,188 10,747 (222,510) (211,763) 0 (33,652) 0 (245,414) (8,023) (11,552) 211,685 0 (53,304) 478,472 63.8 94,961 46,959 0 7,916 3.0905 3.0857 2008 69,288 23.70 4.80 (4.80) 14.90 0.80 2.10 1.40 0.80 0.40 3.40 (1.00) 16.40 6.10 4.00 9.40 0.00 5.18 3.03 754,516 148,688 16,437 407,574 424,011 424,011 0 424,011 358,621 109,349 533,360 (7,493) 373 (7,120) 0 (6,878) 0 (13,998) (35,844) 2,114 170,080 647 122,998 292,163 10.9 55,074 33,356 0 14,807 3.1080 3.0752 2007 56,732 21.50 6.00 (14.70) 13.10 0.90 2.30 0.40 0.90 (0.10) 0.10 (9.30) 12.50 5.00 4.50 9.50 0.20 0.40 531,221 27,791 123,622 158,973 282,595 282,595 0 282,595 89,478 372,073 (2,226) (32,640) (34,866) 0 (3,748) 0 (38,614) (11,410) 27 52,403 2,189 4,595 263,504 8.9 43,863 24,874 0 10,690
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Corporates
(ARS 000, Fiscal Year Ended Jan. 31 until January 2011; Dec. 31 since December 2011) 6 Months 11 Months 6/30/12 12/31/11 2011 Profitability Operating EBITDA 474,664 861.266 719,302 Operating EBITDA Margin (%) 24.1 17.4 18.1 FFO Return on Adjusted Capital (%) (10.7) Free Cash Flow Margin (%) (26.7) Return on Average Equity (%) 41.6 Coverage (x) FFO Interest Coverage 0.6 (1.7) (2.0) Operating EBITDA/Gross Interest Expense 1.6 2.7 3.2 Operating EBITDA/Debt Service Coverage 0.5 0.6 0.8 FFO Fixed Charge Coverage 0.6 (1.7) (2.0) FCF Debt Service Coverage (0.5) (0.9) (0.9) (Free Cash Flow + Cash and Marketable Securities)/Debt Service Coverage (0.3) (0.7) (0.7) Cash Flow from Operations/Capital Expenditures (3.2) Capital Structure and Leverage (x) 18.1 FFO Adjusted Leverage (8.5) (7.7) Total Debt with Equity Credit/Operating EBITDA 6.4 5.5 4.7 Total Net Debt with Equity Credit/Operating EBITDA 6.1 5.1 4.0 Implied Cost of Funds 10.1 8.2 7.3 Secured Debt/Total Debt Short-Term Debt/Total Debt 0.2 0.2 0.2 Debt with Recourse/EBITDA 4.6 3.8 3.5 Net Debt with Recourse/EBITDA 4.3 3.4 3.2 Balance Sheet Total Assets 9,126,251 8,425,474 6,003,831 Cash and Marketable Securities 274,940 412,844 212,117 Short-Term Debt 1,466,453 1,113,981 675,646 Long-Term Debt 4,610,779 4,055,053 2,693,744 Total Debt 6,077,232 5,169,034 3,369,390 Equity Credit Total Debt with Equity Credit 6,077,232 5,169,034 3,369,390 Off-Balance Sheet Debt 0 0 0 Total Adjusted Debt with Equity Credit 6,077,232 5,169,034 3,369,390 Total Debt with Recourse 4,332,860 3,596,846 2,511,827 Total Equity 598,483 677,682 716,528 Total Adjusted Capital 6,675,715 5,846,716 4,085,918 Cash Flow Funds from Operations (127,564) (881,476) (663,231) Change in Working Capital (499,263) (487,910) (142,580) Cash Flow from Operations (626,827) (1,369,386) (805,811) Total Non-Operating/Non-Recurring Cash Flow 0 0 0 Capital Expenditures (147,190) (208,639) (253,452) Dividends 0 0 0 Free Cash Flow (774,017) (1,578,025) (1,059,263) Net Acquisitions and Divestitures 0 0 0 Other Investments, Net (7,948) (7,076) 622 Net Debt Proceeds 639,217 1,789,931 1,023,596 Net Equity Proceeds 0 0 0 Other, Financing Activities 0 0 0 Total Change in Cash (142,748) 204,830 (35,045) Income Statement Net Revenue 1,968,2479 4,953,384 3,964,037 Revenue Growth (%) 69.2 Operating EBIT 391,876 729,102 628,256 Gross Interest Expense 295,827 321,755 224,286 Rental Expense 0 0 0 Net Income (60,995) 206,041 238,573 Note: Numbers may not add due to rounding. Source: Industrias Metalrgicas Pescarmona S.A.I.C. y F. and Fitch. 2010 391,337 16.7 0.2 (4.8) 4.2 0 1.6 0.6 0 0.2 0.5 (0.7) 442.0 5.6 4.4 8.0 0.2 4.3 3.7 3,852,570 239,306 441,677 1,768,353 2,210,030 2,210,030 0 2,210,030 1,682,369 424,423 2,634,453 (232,915) 186,255 (46,660) 0 (65,375) 0 (112,035) (76,554) 59,930 78,770 0 0 (49,889) 2,342,436 53.5 333,935 237,915 0 16,435 2009 341,809 22.4 7.8 (51.3) 7.3 1.2 2.3 0.6 1.2 (1.2) (0.6) (6.3) 10.9 5.9 5.0 11.3 0.2 4.2 3.3 3,168,977 324,043 386,103 1,619,978 2,006,081 2,006,081 0 2,006,081 1,434,996 357,745 2,363,826 34,283 (709,806) (675,523) 0 (107,349) 0 (782,872) (25,592) (36,852) 675,275 0 0 (170,041) 1,526,327 69.3 302,925 149,798 0 25,252 2008 213,801 23.7 4.8 (4.8) 14.8 0.8 2.1 1.4 0.8 0.4 3.4 (1.0) 16.4 6.1 4.9 9.0 0 5.2 3.0 2,331,831 459,520 50,798 1,259,608 1,310,406 1,310,406 0 1,310,406 1,108,319 337,944 1,648,350 (23,120) 1,150 (21,970) 0 (21,224) 0 (43,194) (110,605) 6,524 524,815 0 1,996 379,536 901,527 11.3 169,943 102,928 0 45,691 2007 174,461 21.5 6.0 (14.7) 13.0 0.9 2.3 0.4 0.9 (0.1) 0.1 (9.3) 12.6 5.0 4.0 9.4 0.2 0.4 1,651,034 86,374 384,216 494,087 878,303 878,303 0 878,303 278,098 1,156,401 (6,846) (100,375) (107,221) 0 (11,526) 0 (118,747) (35,089) 83 161,151 0 6,732 14,130 810,326 14.2 134,889 76,492 0 32,873
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Corporates
YPF S.A.
B B/RR4 B AA(arg)
Ratings
Foreign Currency Long-Term IDR Senior Unsecured Local Currency Long-Term IDR National Long-Term Rating IDR Issuer default rating.
Government Controlling Ownership: YPF S.A. is rated at the same level as Argentina following the governments expropriation of Repsols 51% controlling stake in April 2012. The government divided the ownership of these shares between the federal government (51%) and the oil and gas producing provinces (49%). Government ownership generates uncertainty over the companys future efficiency and profitability, as state-owned entities tend to incorporate more social considerations into their business strategy. Strong Business Position: YPF benefits from its strong business position in the domestic market and its vertical integration. Fitch Ratings expects that a state-owned YPF will take an active role in guaranteeing Argentinas domestic oil and gas supply. This role might include managing natural gas imports, which in 2011 represented a cost of USD9.4 billion. Decreasing Reserves and Production Volumes: The historical decrease in reserve levels has resulted in weak operating metrics, which is reflected in the company reporting 5.6 years of reserves as of December 2011, which is well below Fitchs optimal level of 10 years. YPF significantly improved its one-year reserve replacement (RRR) to 113% in December 2011 from 43% in 2009, although its three year RRR is still low at 80%. YPF has shown a renewed focus on its upstream business, which suggests the potential existence of significant resources. Low Debt Concentrated in the Short Term: YPFs leverage is low at approximately USD2.3/barrels of oil equivalent (boe) as of June 30, 2012, but is expected to grow modestly following recent debt issuances. The company has indicated that it will fund a portion of its aggressive capex plan with additional debt. YPFs debt profile is composed of 90% short-term debt, posing a refinancing risk that could result in a negative rating action.
Rating Outlooks
Long-Term Foreign Currency IDR Long-Term Local Currency IDR National Long-Term Rating RWN Rating Watch Negative. RWN Stable Stable
Financial Data
YPF S.A. (USD Mil.) Revenue EBITDA Cash Flow from Operations Cash and Marketable Securities Total Debt Net Debt To EBITDA (x) 6/30/11 12/31/11 6 Months 12 Months 7,013 13,730 1,862 3,397 1,976 102 2,351 0.6 3,092 339 2,965 0.9
Note: YPF changed to IFRS in January 2012. Figures as of June 2012 are sixmonth figures. Ratios have been calculated by annualizing income statement and cash flow items.

Negative Drivers: Catalysts for a negative rating action include the adoption of political measures that negatively affect YPFs efficiency and or profitability, high refinancing risk, and/or the downgrade of the Argentine sovereign rating. Positive Drivers: A positive rating action seems unlikely as YPFs rating is linked to the sovereign, which is rated B with a Stable Outlook.

Low Liquidity, High Short-Term Debt: YPF has low liquidity of USD102 million as of June 30, 2012, which compares to short-term debt of USD2.2 billion. Fitch expects the governments controlling ownership in YPF to place it in a favorable position to rollover its short-term bank loans. YPF has recently issued approximately ARS1.5 billion, in three domestic bond issuances, for general corporate purposes. In July 2012, YPF purchased USD79 million of its 2028 bonds as a result of the activation of the change of control clause following the nationalization of Repsols stake.
Analysts
255
Corporates
Recovery Rating
The recovery ratings for YPFs capital markets debt instruments reflect Fitchs expectation that the companys creditors would have an average recovery constrained by the soft cap of RR4 for bonds issued by Argentine corporates. Using Fitchs recovery rating methodology, the bondholder recovery value was assessed using the liquidation value of reserves, which is in line with Fitchs sector-specific rating recovery methodology for oil and gas (detailed in the special report, U.S. Exploration and Production Recovery Rating Methodology, published March 20, 2008). Fitch used a USD10/boe reserve value for the companys 1p reserves. Due to existing price caps on natural gas, Fitch has exclusively considered YPFs oil reserves, which produced USD5.8 billion in gross liquidation value prior to administrative claims and concession payments to junior claimants. The model assumes a standard 10% administrative claims adjustment and 5% concession to junior claimants.
Recovery Analysis YPF S.A.

(USD Mil.) IDR: B Liquidation Value Cash Accounts Receivable Inventory Value of 1P Oil Reserve Total Advance Available to Rate (%) Creditors 0 80 50 100 5,840.0 5,840.0 Going Concern Enterprise Value LTM EBITDA as of June 30, 2012 Discount (%) Post-Restructuring EBITDA Estimation Multiple (x) Going Concern Enterprise Value Post-Restructuring EBITDA Estimation Guidelines Interest Expense Rent Expense Est. Maintenance Capital Expenditures Total Distribution of Value Secured Priority Senior Secured Secured Lien 0.0 0.0 Value Recovered Recovery (%) 0 0 Recovery Rating Notching Rating 0 0
5,840.0 5,840.0
5,840.0 584.0 5,256.0
5,256.0 5,256.0 262.8 4,993.2 Value Recovered 2,351.0 Concession Allocation (%) 100
Lien 2,351.0
Recovery (%) 100
Recovery Rating RR4
Notching 0
Rating B
256
Corporates
Organizational Structure YPF S.A.
(As of June 30, 2012)
Summary Consolidated Statistics EBITDA Total Debt Total Debt/EBITDA Net Debt/EBITDA USD1.9 Billion USD2.4 Billion 0.6x 0.6x
YPF S.A. (Argentina)
99.91%
50%
45%
38%
42.86%
100%
A-Evangelista S.A. (Argentina)

50%
Profertil S.A. (Argentina)

30%
Pluspetrol Energy S.A. (Argentina)

50.50%
Compania Mega S.A. (Argentina)

10%
Inversora Dock Sud S.A. (Argentina)

69.83% 9.98%
YPF Holdings Inc. (USA)

99.99%
Refineria del Norte S.A. (Argentina)

99.99%
Oiltanking Ebytem S.A. (Argentina)

36%
Poligas Lujan S.A.C.I. (Argentina)

99.99%
Gasoducto del Pacifico (Argentina)
Central Dock Sud S.A. (Argentina)
YPF International S.A. (Bolivia)
Operadora de Estaciones de Servicios S.A. (Argentina)

33.15%
Oleoducto Trasandino S.A. (Argentina)

18%
YPF Inversora Energetica S.A. (Argentina)

45.337%
Terminales Maritimas Patagonicas S.A. (Argentina)

37%
Oleoducto Trasandino Chile S.A. (Chile)
Gas Argentino S.A. (Argentina)

70%
Oleoductos del Valle S.A. (Argentina)

2.27%
Metrogas S.A. (Argentina)

95%
Metroenergia S.A. (Argentina)
Source: Fitch and YPF S.A.
257
Corporates
Debt and Covenant Synopsis YPF S.A.
(Foreign Currency Notes) Overview Issuer Guarantors Document Date Maturity Date Description of Debt Financial Covenants Consolidated Net Debt/ EBITDA (Maximum) Interest Coverage (Minimum) Acquisitions/Divestitures Change-of-Control Provision/Nationalization Sale of Assets Restriction Debt Restriction Additional Debt Restriction YPF S.A. N.A. Nov. 10, 1998 2028 Senior Unsecured Notes N.A. N.A. In the event a nationalization takes place and is continuing, bondholders representing 25% of principal can request the issuer to repurchase the notes at 100% plus accrued interest. N.A. N.A.
Limitation on Secured Debt N.A. Restricted Payments N.A. Other Cross Default N.A. Acceleration N.A. Restriction on Purchase of Notes The issuer may elect to redeem the notes in whole or in part at 10%. N.A. Not applicable. Disclaimer: The covenant summaries reflect Fitchs interpretation and synopsis of information contained in publicly available documents identified in the Document Date and Location section of each covenant summary table. Fitch cannot ensure that the information contained in such documents is either accurate or complete, or that the covenant summaries, or any particular covenant summary, accurately or completely reflect the key terms of any such document. The information presented in the covenant summaries is provided as is without any representation or warranty and is not a substitute for information provided to investors by an issuer and its agents in connection with a sale of securities. Source: Company and Fitch Ratings.
258
Corporates
Financial Summary YPF S.A.
(ARS Mil., Years Ended Dec. 31) Period-End Exchange Rate Average Exchange Rate 4.5238 4.3012 6/30/12a Profitability Operating EBITDA Operating EBITDA Margin (%) FFO Return on Adjusted Capital (%) Free Cash Flow Margin (%) Return on Average Equity (%) Coverage (x) FFO Interest Coverage Operating EBITDA/Gross Interest Expense Operating EBITDA/Debt Service Coverage FFO Fixed-Charge Coverage FCF Debt Service Coverage (FCF + Cash and Marketable Securities)/Debt Service Coverage Cash Flow from Operations/Capital Expenditures Leverage (x) FFO Adjusted Leverage Total Debt with Equity Credit/Operating EBITDA Total Net Debt with Equity Credit/Operating EBITDA Implied Cost of Funds (%) Secured Debt/Total Debt Short-Term Debt/Total Debt Balance Sheet Total Assets Cash and Marketable Securities Short-Term Debt Long-Term Debt Total Debt Equity Credit Total Debt with Equity Credit Off-Balance Sheet Debt Total Adjusted Debt with Equity Credit Total Equity Total Adjusted Capital Cash Flow Funds from Operations Change in Working Capital Cash Flow from Operations Total Non-Operating/Nonrecurring Cash Flow Capital Expenditures Common Dividends Free Cash Flow Net Acquisitions and Divestitures Other Investments, Net Net Debt Proceeds Net Equity Proceeds Other (Investments and Financing) Total Change in Cash Income Statement Revenue Revenue Growth (%) Operating EBIT Gross Interest Expense Rental Expense Net Income 8,167 26.4 13.7 11.9 1.4 13.7 0.4 0.4 1.2 0.6 0.7 0.6 12.7 0.9 66,151 460 9,892 743 10,635 10,635 0 10,635 27,219 37,854 8,754 (40) 8,714 0 (7,308) 0 1,406 0 0 (2,058) 0 (652) 30,934 4,452 688 2,127 4.3053 4.1295 2011 14,029 24.7 42.6 (9.0) 28.0 12.3 12.8 1.5 12.3 (0.4) (0.3) 1.0 1.0 0.9 0.8 10.7 0.6 55,399 1,461 8,113 4,654 12,767 0 12,767 0 12,767 18,735 31,502 12,333 437 12,770 0 (12,289) (5,565) (5,084) 0 11 3,994 0 0 (1,079) 56,697 28.4 8,563 1,095 0 5,296 3.9787 3.9134 2010 14,748 33.4 48.7 (1.0) 30.5 14.0 15.8 2.1 14.0 0.1 0.4 1.5 0.6 0.5 0.4 12.7 0.8 46,589 2,527 6,176 1,613 7,789 7,789 7,789 19,040 26,829 12,123 603 12,726 (8,729) (4,444) (447) 105 724 382 44,162 29 9,475 931 5,790 3.7990 3.7279 2009 11,831 34.5 40.7 (3.3) 17.8 10.9 12.3 2.1 10.9 0.4 1.7 0.7 0.6 0.4 17.0 0.7 40,283 2,145 4,679 2,140 6,819 6,819 6,819 18,881 25,700 9,513 (99) 9,414 (5,636) (4,897) (1,119) 33 2,016 930 34,320 (2) 6,999 958 3,486 3.4700 3.1800 2008 11,440 32.8 51.3 (7.9) 15.7 25.9 23.3 3.1 25.9 (0.6) (0.3) 1.9 0.4 0.4 0.3 18.0 0.7 39,079 1,216 3,219 1,260 4,479 4,479 4,479 20,356 24,835 12,244 1,314 13,558 (7,035) (9,287) (2,764) (8) 3,140 368 34,875 20 6,665 492 3,640
a June 30, 2012 six-month figures. Note: 1) YPF changed to IFRS in January 2012. Figures as of June 2012 are six-month figures. Ratios have been calculated by annualizing. 2) Numbers may not add due to rounding. Source: Fitch.
259
Corporates
Latin America Corporate Finance Team Directory
United States Fitch Ratings Daniel R. Kastholm Group Head, Latin America Corporates Joe Bormann Basic Industries, Beverage Jose Vertiz Property/Real Estate, Homebuilding Viktoria Krane Food, Beverage & Tobacco, Beverage Lucas Aristizabal Utilities, Energy (Oil & Gas) Jay Djemal Metals & Mining Yolanda Torres Analyst Argentina Fitch Argentina Calificadora de Riesgos S.A. Cecilia Minguilln Sr. Director of Argentinian Corporates, Energy (Oil & Gas), Utilities Ana Paula Ares Energy (Oil & Gas), Utilities Gabriela Catri Infrastructure, Building Material, Construction Fernando Torres Metal & Mining, Building Material & Construction Juan Martin Berrondo Electric-Corporate Gabriela Curutchet Associate Director Brazil Fitch Ratings Brazil Ltda. Ricardo Carvalho Sr. Director of Brazilian Corporates, Utilities Jose Romero Homebuilding, Building Products Mauro Storino Telecom & Media, Utilities Fernanda Rezende Homebuilding, Retail, Pulp & Paper Renata Maria Pinho Electric-Corporate Gisele Paolino Transportation, Retail Dbora Jalles Basic Materials, Airlines Gustavo Mueller Water/Wastewater Utility Liliana Yabiku Building Materials & Construction Ingo Bruno Santos de Araujo Transportation Pedro Carvalho Research Assistant Central America Fitch Costa Rica Calificadora de Riesgos, S.A. Vanessa Villalobos Utilities, Retail, Building Materials Allan Lewis Electric-Corporate Chile Fitch Chile Clasificadora de Riesgos Limitada Rina Jarufe Sr. Director of Chilean Corporates Alejandra Fernandez Building Materials & Construction Paula Garcia-Uriburu Natural Resources Monica Coeymans Forestry Products, Food & Beverage Francisco Mercadal Food, Beverage, & Tobacco Andrea Jimenez Property/Real Estate, Retailing Jorge Fiegelist Associate Director Valentina Pardo Food, Beverage, & Tobacco Josseline Jenssen Energy (Oil & Gas), Utilities Andrea Rojas Research Assistant Colombia Fitch Ratings Colombia Glaucia Calp Sr. Director of Colombia Corporates, Utilities Natalia OByrne Telecommunications, Retail, Water/Waste Utilities Maria Pia Medrano Electric-Corporate, Health Care Jorge Yanes Telecommunications Julian Robayo Water/Waste Utility Mario Irreno Cardenas Water/Waste Utility, Health Care Andres Ricardo Serrano Health Care Manuel Solorzano Research Assistant Mexico Fitch Mexico S.A. de C.V. Sr. Director & Co-Head of Mexican Corporates, Alberto Moreno Diversified Manufacturing, Media Sergio Rodrguez Sr. Director & Co-Head of Mexican Corporates, Telecom Rogelio Gonzalez Food & Beverage, Auto & Related Miguel Guzman Betancourt Retailing Indalecio Riojas Garza Natural Gas & Propane Alberto de los Santos Food, Beverage, & Tobacco, Auto & Related Velia Valdez Analyst Venezuela Fitch Venezuela, Sociedad Calificadora de Riesgos, S.A. Julio Ugueto Food, Beverage, & Tobacco, Homebuilding Telecom, Building Materials, Property & Real Estate, Jose Luis Rivas Energy (Oil & Gas) daniel.kastholm@fitchratings.com joe.bormann@fitchratings.com jose.vertiz@fitchratings.com viktoria.krane@fitchratings.com lucas.aristizabal@fitchratings.com jay.djemal@fitchratings.com yolanda.torres@fitchratings.com cecilia.minguillon@fitchratings.com ana.ares@fitchratings.com gabriela.catri@fitchratings.com fernando.torres@fitchratings.com juan.berrondon@ftichratings.com gabriela.curutchet@fitchratings.com +1 312 368-2070 +1 312 368-3349 +1 212 908-0641 +1 212 908-0367 +1 312 368-3260 +1 312 368-3134 +1 312 606-2301 +54 11 5235-8123 +54 11 5235-8121 +54 11 5235-8129 +54 11 5235-8124 +54 11 5235-8127 +54 11 5235-8100
ricardo.carvalho@fitchratings.com jose.romero@fitchratings.com mauro.storino@fitchratings.com fernanda.rezende@fitchratings.com renata.pinho@fitchratings.com gisele.paolino@fitchratings.com debora.jalles@fitchratings.com gustavo.mueller@fitchratings.com liliana.yabiku@fitchratigns.com ingo.araujo@fitchratings.com pedro.carvalho@fitchratings.com vanessa.villalobos@fitchratings.com allan.lewis@fitchratings.com rina.jarufe@fitchratings.com alejandra.fernandez@fitchratings.com paula.garcia@fitchratings.com monica.coeymans@fitchratings.com francisco.mercadal@fitchratings.com andrea.jimenez@fitchratings.com jorge.fiegelist@fitchratings.com valentine.pardo@fitchratings.com josseline.jenssen@fitchratings.com.bo andrea.rojas@fitchratings.com glaucia.calp@fitchratings.com natalia.obyrne@fitchratings.com mariapia.medrano@fitchratings.com jorge.yanes@fitchratings.com julian.robaya@fitchratings.com mario.irreno@fitchratings.com andres.serrano@fitchratings.com manuel.solorzano@fitchratings.com
+55 21 4503-2627 +55 11 4504-2603 +55 21 4503-2625 +55 11 4504-2618 +55 11 4504-2207 +55 21 4503-2624 +55 21 4503-2629 +55 21 4503-2632 +55 11 4504-2208 +55 11 4504-2205 +55 21 4503-2602 +506 2 296-9182 x29 +506 2 296-9182 x22 +56 2 499-3310 +56 2 499-3323 +56 2 499-3316 +56 2 499-3314 +56 2 499-3340 +56 2 499-3322 +56 2 499-3341 +56 2 499-3300 +59 12 277-4470 +56 2 499-3337 +57 1 326-9999 x1110 +57 1 326-9999 x1100 +57 1 326-9999 x1130 +57 1 326-9999 x1170 +57 1 326-9999 x 1120 +57 1 326-9999 x1002 +57 1 326-9999 x1190 +57 1 326-9999
alberto.moreno@fitchratings.com sergio.rodriguez@fitchratings.com rogelio.gonzalez@fitchratings.com miguel.guzman@fitchratings.com indalecio.riojas@fitchratings.com alberto.delossantos@fitchratings.com velia.valdez@fitchratings.com julio.ugueto@fitchratings.com joseluis.rivas@fitchratings.com
+52 81 8399-9100 x133 +52 81 8399-9100 x135 +52 81 8399-9100 x134 +52 81 8399-9100 x 144 +52 81 8399-9100 x108 +52 81 8399-9100 x110 +52 81 8399-9100 x149 +58 212 286-3356 +58 212 286-3356
260
Corporates
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. Copyright 2012 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY 10004.Telephone: 1800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitchs factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third-party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitchs ratings should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. The information in this report is provided as is without any representation or warranty of any kind. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion is based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at anytime for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. Latin America High Yield November 8, 2012 261
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Latin America High Yield

Comprehensive Analysis of B+ Issuers and Below

Latin America High Yield November 8, 2012

Managing Director of Latin America Corporates

2012 Portfolio Overview and Performance Review

Latin America High Yield November 8, 2012

Improving Macroeconomic Backdrop; Inflation Is Key Risk

Real GDP Growth (%)

F Forecast. IDR Issuer default rating. Source: Fitch.

Latin America High Yield November 8, 2012

Weakening Leverage Trend Should Abate

BRIC Contributions to Quarterly Real GDP Growth

Source: IBGE, Fitch.

BRIC Industrial Production

Robust Debt Capital Market Activity to Continue; History Suggests Caution

Latin America High Yield November 8, 2012

Source: Fitch Ratings.

GDP Growth Euro Zone

Eurozone Financial Crisis Should Not Hurt Access to Credit in 2013

Latin America High Yield November 8, 2012

Trade Balance with China Five-Year Average (20062010)

Modest Direct Exposure to China and Commodities

X Exports. M Imports. TB Trade balance. Source: UNCTAD, Fitch.

Latin America High Yield November 8, 2012

A Decade-Long Commodity Price Boom

Higher Government Meddling in Argentina; Strong Balance Sheets

Latin America High Yield November 8, 2012

Source: UNCTAD, Fitch.

Latin America High Yield November 8, 2012

Corporate Governance Remains a Key Concern in Mexico

Recovery Prospects Are Above Average in the Event of a Default

Fitch Default Rates by Major Sector: Jan. 1, 2012June 30, 2012

Latin America High Yield November 8, 2012

Latin America High Yield November 8, 2012

Latin America High Yield November 8, 2012

Latin America High Yield November 8, 2012

Key Rating Drivers

What Could Trigger a Rating Action

Recovery Analysis AES Dominicana

140.0 14.0 126.0

Amount Outstanding 164

Value Recovered 126

Concession Allocation (%)

Recovery Rating RR2

Latin America High Yield November 8, 2012

The AES Corporation IDR B+ (100% Equity Owner)

AES Andres BV Operating Subsidiary (100% Equity Owner)

Dominican Power Partners Operating Subsidiary

Source: AES Dominicna.

Latin America High Yield November 8, 2012

Limitation on Secured Debt Restricted Payments

Other Cross Default Acceleration

Intercompany Loans Restriction on Purchase of Notes

Latin America High Yield November 8, 2012

Latin America High Yield November 8, 2012

Key Rating Drivers

What Could Trigger a Rating Action

Latin America High Yield November 8, 2012

Recovery Analysis Alto Palermo S.A. (APSA)

31.1 57.0 1.7 349.7 439.5

446.9 446.9 22.3 424.5

Latin America High Yield November 8, 2012

Organizational Structure Alto Palermo S.A.

Consumer Financing Tarshop Apsamedia 100% 100% 100% 100%