Fitch Places Anheuser-Busch, AmBev & CMQ's Rtgs on Rating Watch Negative

2008-06-12 23:44:35 -

- Fitch Ratings has placed the following ratings of Anheuser-Busch Companies, Inc. (BUD), Companhia de Bebidas das Americas (AmBev) and Cerveceria y Malteria Quilmes S.A.I.C.A. y G. (CMQ) on Rating Watch Negative.

Anheuser-Busch Companies, Inc. (BUD)

--Issuer Default Rating (IDR) 'A';

--Short-Term IDR 'F1';

--Commercial Paper F1';

--Bank credit facilities 'A';

--Senior unsecured notes 'A'.

Companhia de Bebidas das Americas (AmBev)

--Foreign Currency (IDR) 'BBB';

--Local Currency Issuer Default Rating (LC IDR) 'BBB';

--Unsecured Notes due 2011, 2013 and 2017 'BBB';

--National Scale Rating 'AAA (bra)'

Cerveceria y Malteria Quilmes S.A.I.C.A. y G. (CMQ)

-Foreign Currency IDR 'BB';

-Local Currency IDR 'BB';

-Senior unsecured notes 'BB'.

Approximately $9 billion of BUD debt, $1.3 billion of AmBev debt and $150 million of CMQ debt is affected by this rating action. Fitch cautions investors that in case BUD is taken over, only certain bonds can be put back to the issuer with a change of control triggering event - this is defined as a change of control followed by a downgrade to below investment grade.

Fitch's action follows yesterday's announced proposal by InBev to acquire BUD's outstanding common stock for $65 per share in an all-cash transaction. A combination of these two companies will produce the world's largest brewing company with leading positions in many countries, a balanced exposure to developed and developing markets and considerable growth opportunities.

The cost of this transaction is estimated at $46 billion. This does not include existing debt at BUD, which totals $9.3 billion. The combined company's debt would total an estimated $65.5 billion. Reflecting the sizable increase in leverage, debt service will be onerous at the outset.

On a pro-forma basis, the combined company would have net sales of $36.4 billion and EBITDA of $11.9 billion. Initially, excluding any equity or asset sale proceeds or cost benefits from the combination, debt/EBITDA is high at 5.5 times (x). If InBev is successful in acquiring BUD, a multiple notch downgrade of BUD is likely.

InBev's management has stated that the transaction would be carried out at the InBev level and that debt would not be placed at the level of its subsidiary AmBev (61.4% of total capital and 73.9% of voting shares), which has operations in both North and South America. AmBev's ratings were placed on Rating Watch Negative to reflect the close relationship between InBev and AmBev and the potential impact upon AmBev's dividend policy and future capital structure. CMQ is an indirect subsidiary of AmBev that operates in Argentina. CMQ's U.S. dollar-denominated debt due in 2012 is rated 'BB', two notches above the 'B+' Argentine country ceiling due to implicit support from AmBev. A downgrade of AmBev's ratings could potentially affect the credit rating of these notes.

Fitch will monitor BUD's response and any actions it may take to InBev's proposal as well as review InBev's plans to maintain an investment grade profile.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.

Fitch Ratings
Thomas P. Razukas, CFA, +1-212-908-0223
New York (Anheuser-Busch)
Giulio Lombardi, +44(0)20 7417 6314
London (InBev)
Joe Bormann, CFA, +1-312-368-3349
Chicago (AmBev and CMQ)
or
Media Relations, New York:
Brian Bertsch, +1-212-908-0549
Christopher Kimble, +1-212-908-0226