(Adds analyst’s quote, details on company, prior missed payment)
By Christine Murray and Alexandra Alper
MEXICO CITY, Jan 20 (Reuters) - Struggling Mexican construction firm ICA will default on a second bond interest payment, the company said on Wednesday, as it grapples with a heavy dollar debt load and a reduced stream of projects that have sapped its cash flow.
The company, hit by a sinking peso that makes its dollar debt more expensive, said on Wednesday it would not make a payment of around $6 million on a bond maturing in 2017. It is due to pay out another $22.25 million on Feb 4.
The news was no surprise to markets after ICA said in November it wouldn’t pay $31 million on a bond maturing in 2024. The announcement prompted rating agencies to downgrade its debt deeper into junk territory.
ICA’s share price has more than halved since the November announcement of a bond payment grace period. On Wednesday, the stock touched an historic low of 1.89 pesos compared with a price of 16.95 pesos a year ago.
In a client note, Barclays said the second missed payment was “a foreseeable outcome,” but added it hoped the company would soon release a “credible” restructuring plan in the face of “major headwinds” from the macro-economic climate.
ICA, which hired Rothschild as financial advisors, said it hoped to finalize an initial restructuring plan by mid-February. Wednesday’s announcement also named Guadalupe Phillips, a former Grupo Televisa vice president, as its head of restructuring.
In the meantime, the firm has sped up efforts to slim down, selling its stake in waste management firm Proactiva and offloading homebuilder assets into a venture with a real estate group. ICA plans to slash around 1,000 employees between this year and last, Reuters reported.
But the cuts are unlikely to right the company, which said on Wednesday it is still exploring options to manage its debt load and sees no specific new transactions on the horizon.
ICA has failed to win important new concessions and has fallen behind and struggled to make money on existing projects.
It faces a total debt of almost 58 billion pesos and a net debt of 8.9 times earnings before interest, tax, depreciation and amortization (EBITDA), as of its latest filing. (Editing by Paul Simao and Alan Crosby)