Bangkok--26 Nov--TRIS Rating
TRIS Rating removes the CreditAlert with “developing” implication placed on the company and senior unsecured debenture ratings of Berli Jucker PLC (BJC) since 13 August 2014, following BJC’s announcement to acquire 100% of Metro Cash & Carry Vietnam Limited (METRO Vietnam), a leading modern-trade wholesaler in Vietnam. TRIS Rating replaces the CreditAlert removal with a “stable” outlook. BJC’s company and senior unsecured debenture ratings remain at “A+”. The acquisition price is EU655 million, with the equivalent of Bt28,370 million.
The rating action reflects BJC's finalized financing package to fund the transaction. After the acquisition, BJC's balance sheet is expected to remain moderately strong. BJC’s shareholders approved the acquisition of METRO Vietnam at an extraordinary general meeting (EGM) held in October 2014. The shareholders also approved an increase in BJC’s registered capital worth a total of Bt16,219.5 million to fund a portion of the acquisition. BJC will issue 360.4 million new common shares and issue rights to its existing shareholders to purchase two new shares for every nine shares they own. TCC Holding Co., Ltd., BJC's major shareholder with a 73.8% stake, has indicated to subscribe the rights offering for its proportion. TCC Holding also offered to purchase any remaining shares, if some shareholders do not fully subscribe.
The acquisition will likely be funded with new debt and new equity, in a ratio of 1:1. After the acquisition is complete, the debt to capitalization ratio is projected to stay in the range of 50%-53%, in line with the current rating category. The benefits and synergies between BJC and METRO Vietnam may take time to materialize. TRIS Rating expects that BJC will integrate METRO Vietnam's operations smoothly as planned.
The “stable” outlook takes into consideration the sound operating performance of BJC’s core business lines. A successful expansion into the Vietnamese market could be a positive factor for BJC’s credit ratings. However, the ratings and/or outlook could be revised downward if the METRO Vietnam transaction causes an additional financial burden.
Berli Jucker PLC (BJC)
Company Rating: A+
Issue Rating:
BJC165A: Bt1,000 million senior unsecured debentures due 2016 A+
Rating Outlook: Stable