TEXT-S&P rates beverage group Anadolu Efes' proposed bond 'BBB-'

(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 beverage group Anadolu Efes Biracilik ve Malt Sanayii AS .

The rating on the proposed bond is equalized with the long-term issuer credit rating on Anadolu Efes, and is conditional on successful issuance and our satisfactory review of the final documentation. The amount, maturity, and coupon are to be determined at placement.

We believe the level of contractual and structural subordination for future holders of the notes to be issued is low, because Anadolu Efes plans to use bond proceeds to refinance a significant part of priority debt issued at its operating subsidiary level within the next year, while geographic diversity of its operations is an additional mitigant.

The ratings on Anadolu Efes reflect its "satisfactory" business risk profile and "intermediate" financial risk profile, as our criteria define these terms. Anadolu Efes' business risk profile has improved following its completed takeover of the Russian and Ukrainian businesses of SABMiller PLC (BBB+/Positive/A-2). The deal involved the transfer of all of SABMiller's production facilities and brand rights in Russia and Ukraine to Anadolu Efes in 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 player in the Russian beer market with a 20% market share by value. We expect the company to benefit from its stronger competitive position and larger economies of scale and better control over its input costs, particularly in the supply chain and route-to-market areas.

Anadolu Efes' "intermediate" financial risk profile continues to be constrained by the short tenor of almost all of its maturities, which, however, we expect improve thanks to the bond issuance. Furthermore, its liquidity sources are not very diversified and rely on cash and uncommitted lines. At the same time, Anadolu Efes' modest debt leverage, in our view, mitigates its heavy exposure to foreign currency on the debt side and interest rate volatility.

RELATED CRITERIA AND RESEARCH 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 ((Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net))