(The following statement was released by the rating agency)
Oct 10 - Standard & Poor's Ratings Services said today that it had assigned its 'BBB-'long-term issue rating to the proposed senior unsecured notes to be issued by Turkish beveragegroup Anadolu Efes Biracilik ve Malt Sanayii AS .
The rating on the proposed bond is equalized with the long-term issuer creditrating on Anadolu Efes, and is conditional on successful issuance and oursatisfactory review of the final documentation. The amount, maturity, andcoupon are to be determined at placement.
We believe the level of contractual and structural subordination for futureholders of the notes to be issued is low, because Anadolu Efes plans to usebond proceeds to refinance a significant part of priority debt issued at itsoperating subsidiary level within the next year, while geographic diversity ofits operations is an additional mitigant.
The ratings on Anadolu Efes reflect its "satisfactory" business risk profileand "intermediate" financial risk profile, as our criteria define these terms.Anadolu Efes' business risk profile has improved following its completedtakeover of the Russian and Ukrainian businesses of SABMiller PLC(BBB+/Positive/A-2). The deal involved the transfer of all of SABMiller'sproduction facilities and brand rights in Russia and Ukraine to Anadolu Efesin exchange for a 24% stake in Anadolu Efes without recourse to debt financing.
As a result of the transaction, Anadolu Efes became the second-largest playerin the Russian beer market with a 20% market share by value. We expect thecompany to benefit from its stronger competitive position and larger economiesof scale and better control over its input costs, particularly in the supplychain and route-to-market areas.
Anadolu Efes' "intermediate" financial risk profile continues to beconstrained by the short tenor of almost all of its maturities, which,however, we expect improve thanks to the bond issuance. Furthermore, itsliquidity sources are not very diversified and rely on cash and uncommittedlines. At the same time, Anadolu Efes' modest debt leverage, in our view,mitigates its heavy exposure to foreign currency on the debt side and interestrate volatility.
RELATED CRITERIA AND RESEARCH 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 ((Bangalore Ratings Team, Hotline: +91 80 41355898, Bhanu.priya@thomsonreuters.com,Group id: BangaloreRatings@thomsonreuters.com,Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net))