TRIS Rating Co., Ltd. has affirmed the company rating of Berli Jucker PLC (BJC) at “A+”. At the same time, TRIS Rating has assigned the rating of “A+” to BJC’s proposed up to Bt3,500 million senior debentures. The rating outlook is “stable”. This debenture rating is to replace the rating that TRIS Rating previously assigned to BJC’s proposed up to Bt1,500 million senior debentures on 22 October 2007 as the company decides to increase the issue size. The proceed will be used to refinance its existing debt and for expansion purpose, particularly in glass bottle manufacturing. The ratings reflect BJC’s solid market positions in key operating segments with a portfolio of strong brand names, cost competitiveness due to economies of scale in glass container and tissue paper manufacturing, and an experienced and capable management team. The ratings also take into consideration the company’s diversified business portfolio and strong relationships with suppliers and clients. These factors are partially offset by the highly competitive operating environment, especially in the consumer product sector; exposure to certain commodity price fluctuations; and regulatory concerns in the alcoholic beverage consumption, which might impact the sales of BJC’s glass bottles. The “stable” outlook reflects the expectations that BJC will continue to maintain its competitive strengths through economies of scale, product innovation, and ability to secure substantial orders of glass bottles from Thai Beverage PLC, one of the companies owned by the Sirivadhanabhakdi family. BJC is also expected to sustain its profit margins in the intermediate term and expand conservatively. TRIS Rating reported that BJC has been in business in Thailand since being established primarily as a trading company more than a hundred years ago. During 2001-2003, the company underwent a major organizational restructuring and TCC Holding Co., Ltd. (TCC), an investment holding company under the helm of the Sirivadhanabhakdi family, became its major shareholder. By year end 2007, BJC’s total revenue was Bt19 billion, a 9% increase from 2006. Packaging segment was its largest revenue source, representing 42% of total revenue, followed by consumer product at 32%, and technical and industrial products at 26%. One of BJC’s major strengths is its leading position in the glass bottle industry, a position it has held for decades. BJC ranks one of the top two largest glass bottle producers in Thailand, granting it with benefits from economies of scale. The customer base of this industry is solid. About 40% of BJC’s glass bottles were sold to TCC Group; the rest is used by a wide array of segments, such as food, energy drinks, and soft drinks. Most of the major clients have been with the company for more than 10 years. BJC’s strong business profile is also supported by its brand equity in tissue and snack food products, such as Cellox toilet paper and Tasto potato chip. The company is one of the largest tissue producers in Thailand and the second-largest snack-food manufacturer. The company’s key competitive edge in the technical and industrial product segment is its solid connections with suppliers and customers. TRIS Rating said, BJC’s financial profile is strong. Cash flows have been stable. Aggressive capacity additions in glass and tissue production during 2004-2005 resulted in a moderate level of leverage. During the last three years, funds from operations to total debt ranged between 58%-70%, which is considered strong. Earnings before interest, tax, depreciation and amortization (EBITDA) to sales remained in the range of 13%-14%. Operating margins continue to be pressured by intense competition, rising raw material costs, and higher fuel prices. Total debt to capitalization ratio was 27%-34%, but is expected to be weakened in the intermediate term following the debenture issuance. TRIS Rating has already incorporated BJC’s business expansion strategy in its credit profile and expects BJC’s financial profile to improve over times once the synergy from the acquisition in terms of EBITDA contribution and diversity is materialized. -- EndBerli Jucker PLC (BJC) Company Rating: Affirmed at A+ Issue Rating: Up to Bt3,500 million senior debentures due 2011 A+ A- Rating Outlook: Stable -------------------------------------------------------? Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.