{"id":203295,"date":"2010-01-20T10:48:00","date_gmt":"2010-01-20T15:48:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-8232771165331457722"},"modified":"2010-01-20T10:57:15","modified_gmt":"2010-01-20T15:57:15","slug":"yahoo-news-india-fitch-downgrades-kraft-cadbury-on-takeover-plan","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/203295","title":{"rendered":"YAHOO NEWS INDIA: Fitch downgrades Kraft, Cadbury on takeover plan"},"content":{"rendered":"

Wed, Jan 20 07:32 PM<\/p>\n

Kraft Foods Inc and Cadbury Plc saw their credit ratings slashed by ratings agency Fitch to the lowest investment grade after Kraft won Cadbury’s backing for its $19.6 billion takeover bid.<\/p>\n

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Fitch said on Wednesday it had downgraded its issuer default rating on both companies one notch to BBB-.<\/p>\n

Late Tuesday, rival ratings agency Moody’s said Kraft’s credit ratings would likely remain investment grade following the deal<\/a>, but were under review for a possible downgrade.<\/p>\n

Separately Standard & Poors said it would keep an A- long-term corporate credit on Kraft, creditwatch negative, and a BBB rating on Cadbury, creditwatch with “developing implications”.<\/p>\n

In a statement Fitch said its downgrades “reflect the anticipated increase in financial leverage of the combined Kraft\/Cadbury”.<\/p>\n

The deal will result in Kraft paying 500 pence in cash plus 0.1874 of a new Kraft share for each Cadbury share. The cash portion of around $11.2 billion will be financed with debt.<\/p>\n

Fitch said it expected the combined company’s leverage to reduce to around 3 or 3.5 times EBITDA from 4 times within two years, through growth of earnings and repayment of debt through free cash flow.<\/p>\n

“This level is considered commensurate with the ‘BBB-‘ rating,” it said.<\/p>\n

At 1232 GMT, shares in Cadbury were little changed at 836-1\/2 pence, slightly outperforming a weaker FTSE 100, while Kraft shares traded in Frankfurt were up 1.2 percent at 20.6 euros.<\/p>\n

(Editing by Hans Peters and David Holmes)<\/p>\n

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