Bulletin: CAP S.A.'s Strong Cash Flow Generation Should Offset Losses From Accident At Guacolda 2 Port

SAO PAULO (S&P Global Ratings) Dec. 13, 2018--S&P Global Ratings said today that Chilean mining company CAP S.A.'s (Cap; BB+/Stable/--) cash flow generation and low leverage metrics should let it absorb losses from the fatal Guacolda 2 Port accident that occurred on Nov. 22. Cap uses the Guacolda 2 Port to ship its pellet production, which accounts for half of the mining unit's output. The company estimates that the port could remain closed for up to eight months. Because of that, CAP will need to redirect its pellet output through more expensive logistics, affecting its EBITDA. If EBITDA were to decline by about 10%-30% in 2019, debt to EBITDA could increase between 0.1x-0.5x and achieve 1.4x--up from the 0.9x reported

...SAO PAULO (S&P Global Ratings) Dec. 13, 2018--S&P Global Ratings said today that Chilean mining company CAP S.A.'s (Cap; ##+/Stable/--) cash flow generation and low leverage metrics should let it absorb losses from the fatal Guacolda 2 Port accident that occurred on Nov. 22. Cap uses the Guacolda 2 Port to ship its pellet production, which accounts for half of the mining unit's output. The company estimates that the port could remain closed for up to eight months. Because of that, CAP will need to redirect its pellet output through more expensive logistics, affecting its EBITDA. If EBITDA were to decline by about 10%-30% in 2019, debt to EBITDA could increase between 0.1x-0.5x and achieve 1.4x--up from the 0.9x reported in the third quarter of this year--with significant headroom from our downgrade trigger of 2.0x and with funds from operation to debt consistently above 45%. In our view, the company's strong cash flow generation and financial flexibility provides it with enough cushion...

Bulletin