Bangkok--3 Nov--TRIS Rating
TRIS Rating Co., Ltd. has affirmed the “AAA” rating with “stable” outlook to the Bt5,000 million guaranteed debentures (NTH086A) of Nestl? (Thai) Ltd.’s (NTH or Issuer). The debentures are guaranteed unconditionally and irrevocably by Nestl? S.A. (Guarantor), which owns 100% of NTH. The issue rating is based on the credit quality of the Guarantor, which is rated “Aaa” with a “stable” outlook by Moody’s Investors Service (Moody’s). The Guarantor is also rated “AAA” by Standard and Poor’s (S&P), with revised outlook to “stable” from “negative” in April 2006. The Guarantor has agreed to guarantee the payment of a maximum amount equal to Bt5,500 million. Although the Guarantor shall not be liable for the guaranteed debentures in the event that the intervention of any government agency of Thailand expropriates or nationalizes the
assets of the Issuer, TRIS Rating believes that such an event is highly unlikely.
The “stable” outlook of NTH’s guaranteed debentures reflects the extremely strong credit profile of the Guarantor, Nestl? S.A., which is rated “AAA” and “Aaa” by S&P and Moody’s, respectively.
TRIS Rating reported that under the guarantee, the Guarantor irrevocably and unconditionally guarantees, as joint and several Guarantor under Article 496 of the Swiss Code of Obligations, to make payment on demand to the debentureholders’ representatives of the principal and any other amounts payable by the Issuer up to a maximum amount of Bt5,500 million.
This maximum amount covers the overdue principal, overdue interest, and any other amounts owed with respect to the debentures. The guarantee remains valid even though NTH will sell and license the canned liquid milks, chilled products and UHT businesses to Fraser & Neave Holdings Berhad (F&N), a multinational beverage company based in Malaysia. However, the Guarantor will not be liable to pay any amount pursuant to this guarantee to the extent that the Issuer’s failure to pay has resulted from the occurrence of: the expropriation or nationalization by any government agency of Thailand equal to or exceeding 10% of the consolidated fixed assets of the Issuer and its subsidiaries; or the expropriation or nationalization that has the effect of preventing the Issuer and its subsidiaries from carrying on business; or, the transfer by intervention from any government agency of Thailand of the majority shareholding in, or control over, the Issuer to an entity that is not a member of the Nestl? Group. This guarantee is governed by Swiss law. The place of jurisdiction shall be Vevey, Switzerland.
TRIS Rating said, Nestl? S.A., the ultimate holding company of the Nestl? Group, is a public company listed on the Swiss Exchange. Nestl? is the market leader in the branded and packaged food industry. S&P and
Moody’s have rated Nestl? S.A. at “AAA” and “Aaa”, respectively. In the view of S&P, the rating for Nestl? S.A. reflects the group’s leading position in branded and packaged food in the global marketplace, strong and stable cash generation, an extremely diversified product portfolio, a geographically-diverse customer base and management’s conservative financial policy. The financial profile of Nestl? Group has improved significantly in 2004 after it deteriorated as a result of acquisitions, especially Ralston Purina Co., Ltd. in 2001. S&P revised the outlook of Nestl? S.A. to “stable” from “negative” in April 2006 due to stronger and sustainable financial ratios at year-end 2005.