A recent ratings cut for Maxcom could pressure the company’s acquisition multiple, according to industry experts. Last week, Moody’s cut the Mexico-based telephone company’s corporate family and senior unsecured debt to Caa1 from B3. The company has said it is seeking strategic alternatives, and it is understood that Barclays has been retained to sell the business. The rate cut comes on top of statements by Mexican lawmakers that no major political party will look to introduce legislation next year that would lift the ceiling on foreign ownership of Mexico telecom companies, currently set at 49%. That restriction would prevent either Spain’s Telefonica or France’s Vivendi from acquiring the business, both of which had been named as potential buyers. Sergio Rodriguez, a credit ratings analyst with Fitch, says that the Moody’s cut is only one of several issues that will likely weigh on the company, including a competitive environment that is more challenging than in previous years. “If there’s any company interested in buying Maxcom, they’re going to have factor in the competitive environment,” Rodriguez says. “That will probably have some impact on the valuation of the company.” Fitch does not rate Maxcom’s creditworthiness. A New York-based investment banker away from the deal says that instead of a sale, Maxcom’s bondholders will likely end up owning the company, at which point they may seek other turn-around options. As of Q3 2010m Maxcom has $204m in debt and a total debt-to-equity ratio of around 64. Rodriguez agrees that a restructuring is a move the company is more likely to consider now than a year ago, as a result of the deteriorating competitive environment, the downgrade, and weaker operating results. However, other bankers expressed the belief that Maxcom is still likely to succeed in selling itself, though they agreed recent news will put pressure on the price.