ThaiBev's rating unaffected by Serm Suk deal
Standard & Poor's Ratings Services said today its corporate credit rating on Thai Beverage Public Co. Ltd. (Thai Bev; BBB/Stable/--; axA/axA-2) is not affected by the company's proposal to acquire shares in Serm Suk Plc.
Our 'BBB' rating on Thai Bev factors in some buffer for expansion.
"We believe the company's financial risk profile will remain modest even if the proposed debt-financed acquisition proceeds with the Bt15.422 billion required for 100 per cent of SSC," S&P said in a statement.
Under this scenario, S&P estimates its ratio of debt to EBITDA would weaken to about 1.4x, from 0.7x, and its ratio of debt to debt plus equity would increase to about 32 per cent, from about 20 per cent for the half-year ended June 30, 2011.
"In our opinion, the consistent free cash flow generation from Thai Bev's spirits division should continue supporting its modest financial risk profile. The proposed transaction also should not immediately affect Thai Bev's liquidity as the company has ample credit lines. Thai Bev expects to finance the acquisition with a bridge loan that will be subsequently converted into a three- to five-year loan."
It furthered that Thai Bev's product diversification would improve marginally, if the proposed acquisition is successful. On the basis of full consolidation, it estimates the non-alcoholic beverages division would contribute about 10 per cent of EBITDA, an increase from about 2 per cent before the proposed SSC acquisition.
Thai Bev expects to submit its tender offer for the SSC shares by Sept 14, 2011.
It was agreed last week that PepsiCo Group would sell all shares in SSC to Thai Bev, to end a year-long conflict.
