Fitch Ratings has assigned a 'BB-' rating to the following note registered by Constellation Brands, Inc. (STZ) to fund the purchase price of Beam Wine Estates, Inc, a subsidiary of Fortune Brands, Inc:
--$500 million 8.375% senior unsecured note due Dec. 15, 2014.
The Rating Outlook is Negative.
The rating reflects STZ's leading market share in most of the major wine markets around the globe and a diversified alcoholic beverage portfolio. The rating also considers STZ's willingness to operate at higher leverage levels and its appetite for acquisitions. The company's leverage has increased due to successive debt-financed acquisitions and stock repurchases. Required debt repayment over the next five years is expected to be well beyond STZ's cash-generating capabilities. It is noted that the company currently maintains adequate liquidity and access to the capital markets as shown by this financing.
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