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PRESS RELEASE:
Fitch:
Pernod Ricard Note Issue Expected BB+
Thursday May 28th, 2009 / 13h16
Fitch Ratings-London-28 May 2009:
Fitch Ratings has today assigned France-based spirits company Pernod Ricard SA's (Pernod)
prospective issue of EUR-denominated notes an expected senior unsecured rating of 'BB+'.
Pernod's Long-term Issuer Default Rating (IDR) is 'BB+' with a Stable Outlook.
The final rating is contingent upon receipt of final documents conforming to information already received.
Pernod intends to use the proceeds of the notes for refinancing existing short-term and medium-term debt.
The notes will constitute senior unsecured obligations of Pernod and will rank equally with all other present and future unsecured indebtedness of Pernod.
Pernod's IDR reflects its strong business profile as the number two player in the global spirits industry,
with geographically diverse operations and a product portfolio that includes powerful brands in the major international categories of consumption.
Fitch notes that - following the Vin & Sprit transaction - Pernod's 'BB+' rating was not compatible with its high leverage of over 6.0x on an annualised basis for financial year 2008 (FY08),
but management has stated its commitment to reduce the net debt/EBITDA ratio to 4.5x-5.0x by the financial year ended 2010 (FYE10),
and to 4.0x by FYE11.
The agency nonetheless remains concerned about the evolution of Pernod's profits amid subdued consumer confidence and disposable income.
In order to support reaching its reduced leverage targets, Pernod completed a EUR1bn rights issue in May 2009;
the "Wild Turkey" brand was agreed to be sold for EUR0.5bn;
and a few less strategic brands are being put up for sale with the aim of raising a total of approximately EUR1bn by December 2009.
Finally, Pernod's cash dividend will be reduced by approximately EUR0.2bn in FY10.
Consequently, Fitch changed the Outlook on Pernod's ratings to Stable from Negative on 13 May 2009
and affirmed the Long-term IDR at 'BB+'
reflecting the company's strengthened position
within the 'BB+' rating following these initiatives.