Grupo Kaltex 1Q19 Credit Report

28 May 2019

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The key for us continues to be Kaltex’s free cash flow generation, and, in this regard, it has continued improving significantly with respect to 4Q18. For a second consecutive quarter, LTM free cash flow generation for the restricted subsidiaries (consolidated minus Coltejer) was positive, at MXN 388m, continuing the improvement we saw at the end of 2018 relative to LTM 3Q18. The implied interest rate Kaltex’s restricted subsidiaries was able to pay during LTM 1Q19 was 5.7%, not that far from the 8.4% it actually paid (See Table 1).

On 11 April, Kaltex paid some MXN 265m as coupon on the 2022 bonds. However, as of 31 March, Kaltex only had MXN 245m in cash. During 1Q19 Kaltex also returned MXN 46m to its shareholders. It is worth mentioning that second quarters tend to be free cash flow negative for Kaltex.