July 21, 2017 / 9:17 PM / 8 months ago

Fitch: Bimbo's Ratings Unchanged by Acquisition of East Balt Bakeries

(The following statement was released by the rating agency) MONTERREY, July 21 (Fitch) In Fitch Ratings' opinion, the announcement of an agreement to acquire East Balt Bakeries by Grupo Bimbo, S.A.B. de C.V. (Bimbo) has no rating impact as it will not materially affect the company's financial position and will slightly improve its diversification. The transaction is valued at USD650 million and will be financed with proceeds from its current committed long-term revolving credit facility. Fitch views this acquisition as manageable for Bimbo's credit quality. On a pro forma basis, considering an annual EBITDA contribution from East Balt Bakeries of around USD70 million, Fitch projects that by year-end 2017 Bimbo's total debt adjusted for rents-to-EBITDAR will approximate to 3.6x, while its total adjusted net debt-to-EBITDAR will be around 3.4x. These leverage metrics do not deviate materially from our previous estimates of 3.4x and 3.2x, respectively. In addition, Fitch anticipates these ratios will gradually strengthen towards 3.2x and 3.0x, respectively, by year-end 2018. Fitch considers the acquisition of East Balt Bakeries as positive for Bimbo as it will provide diversification in the food service industry and expand its current operational footprint. East Balt Bakeries is a global leader in the food service industry that produces and sells baked goods mainly to Quick Service Restaurants. It generates annual sales of around USD420 million and operates 21 bakeries in 11 countries across the U.S., Europe, Asia, the Middle East and Africa. East Balt Bakeries' sales and EBITDA will approximately account for 3% and 5%, respectively, of Bimbo's consolidated figures. Bimbo's 'BBB' ratings reflect its solid business position as a global leader within the bakery industry, supported by a portfolio of well-known brands and extensive distribution network among the main markets in which it participates. Its ratings also incorporate the company's credit profile with stable leverage metrics, ample liquidity and positive FCF generation across the business cycle. Fitch currently rates Bimbo as follows: --Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BBB'; --Long-Term Local Currency IDR at 'BBB'; --National Long-term Rating at 'AA+(mex)'; --USD800 million senior notes due 2020 at 'BBB'; --USD800 million senior notes due 2022 at 'BBB'; --USD800 million senior notes due 2024 at 'BBB'; --USD500 million senior notes due 2044 at 'BBB'; --Local Certificados Bursatiles Issuances at 'AA+(mex)'. The Rating Outlook is Stable. Contact: Rogelio Gonzalez Director +52 8399 9100 Fitch Mexico S.A. de C.V. Prol. Alfonso Reyes 2612 Monterrey, N.L., Mexico Secondary Analyst Johnny Da Silva Director +1-212-908-0367 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. 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