First time, the EPM faces serious difficulties in maintaining the investment grade rating.
This situation is compelled to make the company cautiously follow a financial strategy that allows financial resources for risk rating agencies, owners of international bonds and financial institutions responsible for this.
The MRD's investment reserves have been adopted by negative reviews of the EPM's latest R & D rating 3 ratings; This record is recorded, that is, it is a level before the investment grade loses.
In the same sense, Fitch firm gave a rate level close to BWB negative vision, with investment grade loss.
The epicenter of the EPM was made by 2019, with international bonds of up to $ 500 million. EPM demands to maintain a depth / ebid ratio, max 3, 5, ie a maximum of $ 3.5 billion from the operating cash of each peso.
Currently the index is estimated to be a 3.5. However, in 2019 EPM has increased to 4 out of 4. Due to delay in access to the work of Hidroituango, the shortfall in revenue will be due in December 2018.
The entry into force of the project is estimated at least 36 months delayed. This is a decline in the EBITA of $ 3.9 trillion, which is the value of energy sales in the three-year budget.
Thus, eBid will decrease to 21% in 2019, which will inevitably lead to a lower level 4 signal. This will happen if the EPM will not take immediate action leading to the liquidation generation that loses this drop in Ebitda.
In front of the owners of bonds, a more rapid productive strategy must be specified. Or, if the EPM mandatory to pay the aforementioned loan will be clear, if there are more than 3 Leverage Indexes. 5
This negative scenario, of course, significantly worsens the liquidity situation, which is the consequence of the leverage ratio and the loss of the investment grase.
In this sense, the EPM will significantly worsen its reputation and regulate international credit access, increasing expenditure and affecting the country's fourth largest company.
As the EPM activates other covenants of international debt, thereby hindering the debt due to a shortage of debt, it is important that this debt can not be implemented through the new debt of the liquidity.
If these final covenants are to be activated, the borrowers can ask Empresas Públicas de Medellín the estimated payout of the total external debt, the current amount is 9.2 trillion peso. Thus, the remedy is worse than disease.
In this background, the Directors of the EPM Board approved a stake in various assets of its allocation. Some of these companies are small shareholders, shares of ISA, and EPM deposits in Chile.
The EPM now owns 10.17% and 112,605,547 shares of IAA, at the current market price of 1.4 billion Colombian pesos.
In Chile, Aguas Antofagasta, Los Cururos windmill sells, so EPM deposited $ 1.2 billion.
In the sale of total assets to be sold, they are expected to raise 3.5 billion peso – four or four times. This will strengthen the liquidity position, project
Last Monday, October 29, the Medellín Council approved the contract to sell the ISA and other small shareholders.
The impact of Hidroituango has not only examined the technical specificity of EPM, but also examined the quality of management of its financial power and company investment portfolio. For financial management, in this crisis, 46.3% of the project's debt crisis has adversely affected EPM's financial strength, and the revised value is estimated at $ 14 billion.
In short, the March, compulsory in EPM defines a strategy for retaining the financial credentials that make access to the international credit markets.
However, in the midst of the crisis, the EPM Business Group has not only demonstrated its strong financial tables, but also has proven free management of financial risks over the years. This reflects the diversification of portfolio of good management investment. It allows it to grow in the core of its business, and is often capable in times of need for more rapid urgent needs.
There is no doubt that the EPM has no financial capacity to complete Hidroitango and its economic indicators will continue to provide international investment grants for the future investments of this major company for the development of the country.
Ivory Dario Aurov
Former president of Columbia Mercantile Exchange (BMC)