New Group Structure and Subordination: DIFL has first claim on the group's Caribbean assets, which comprise the bulk of the group's revenues and cash flow from operations and has a $1.4 billion secured loan facility.
In the case of Digicel, Fitch believes that these legal ties are weak due to the following: the absence of guarantees of DGL's debt by DL and DIFL and the lack of cross default clauses in the debt obligations of DIFL and DL with those of DGL.
Fitch believes that such moves undermine the company's position with creditors and will result in higher costs for refinancing at the level of DL and DIFL, and reduced access to the capital market.
These incentives may place additional burdens on DIFL and DL.
The downgrades reflect Fitch's DDE criteria, as well as the weak legal linkages between DGL and DL and DIFL under the PSL framework.
The parasitic phase components are extremely low since the lossy capacitors ([C.sub.z,m]) create distant pole frequencies compared to the usable frequency range; hence the input and output stimulus of the DIFL would be in same phase at unity gain and closure of loop incites sinusoid oscillations build-up; the corresponding characteristic equation is
(a) Two identical stages, with a common V terminal, are cascaded for DIFL topology having nominal phase output of 180[degrees].
Group Structure Drives Recovery Rates: DGL's USD3 billion notes are subordinated to DL's USD2.3 billion senior unsecured notes, which are subordinated to DIFL's USD1.4 billion senior secured term loans and revolver.
Strong parent-subsidiary linkage exists among Digicel group companies based on intra-group cash flow movement to service debt at its holding company level, resulting in a same IDR level for DGL, DL, and DIFL. No country ceiling or operating environment influence was in effect for the ratings.
The two notch downgrade of DIFL's debt reflects changes to Fitch's Country-Specific Treatment of Recovery Ratings.
A proposed change in DIFL Term Loan B's borrowing cost, from 3.75% to 3.50% over three-month LIBOR (London Interbank Offered Rate), will be immaterial to the cash flow generation of the company while all existing key terms of the loan, including covenants, will remain unchanged, resulting in limited credit impact.
DIFL's USD955 million term loan B is part of its senior secured credit facilities, which are also comprised of USD300 million Term Loan A and USD100 million revolver, which was drawn out during the quarter ended December 31, 2017.