ThaiBev rating outlook unchanged by F&N stake-sale decision
Thai Beverage's rating outlook remains unaffected by the decision of Fraser and Neave's board last Friday concerning the divestment of its stake in Asia Pacific Breweries, which is expected to lead to the break-up of F&N's business empire.
Standard & Poor’s Ratings Services said yesterday that despite F&N’s decision to recommend shareholders to sell its stake in Asia Pacific Breweries (APB) to Dutch brewer Heineken, it remains unclear how the Singaporean company would use the sale proceeds if the transaction gets shareholders’ approval, and how – and whether – the use of the proceeds could affect ThaiBev’s financial risk profile.
“We still expect ThaiBev’s financial risk profile to weaken following the debt-funded acquisition of a 24.1-per-cent stake in F&N in July 2012. We expect to resolve the Credit Watch status on ThaiBev when we have further clarity on the company’s strategy and financial policy, including its dividend payout,” S&P said in a statement.
On August 3, F&N’s board recommended that its shareholders approve an offer from Heineken to acquire F&N’s direct and indirect interests in APB for 5.1 billion Singaporean dollars (Bt129.4 billion), and its interest in the non-APB assets for S$163 million.
ThaiBev on the same day was awarded a S$2.8-billion loan facility from HSBC, Standard Chartered Bank and Sumitomo Mitsui Banking Corp, for the takeover of F&N’s stake.
Industry observers now speculate that F&N’s decision may spark a break-up of the Singaporean conglomerate. As APB is to be sold to Heineken, ThaiBev and Japan’s Kirin Holdings – the two other biggest shareholders of F&N – would be left with business dominated by shopping malls, serviced apartments and industrial buildings.
While Kirin is interested in F&N for its food and beverage business, Coca-Cola is exploring a bid for F&N’s beverage unit.
“F&N might be more open to part with the remaining beverage business,” now that it has accepted Heineken’s offer, Goh Han Peng, a Singapore-based analyst at DMG and Partners Securities, said by telephone. “In a sense, they will achieve a break-up.”
APB was a key draw to investors in F&N, and without it, Kirin and ThaiBev may struggle to justify owning stakes in the remainder of F&N, according to Olivier Nicolai, a London-based analyst at UBS.
