Fitch Ratings today published its first edition of the 'High Yield Food, Beverage, Restaurants (FBR) and Consumer Products Hand Book', a 250-plus page report that provides a comprehensive analysis of leveraged finance companies within the sectors.
The report profiles 20 high yield FBR and Consumer Products issuers. Each company report includes Fitch's assessment of the business and financial profile, as well as key selected financial data, a detailed debt organizational chart, and covenant analyses.
In general, Fitch believes near-term liquidity (cash and credit facility availability) remains sufficient to address the key fixed obligations of the majority of the high yield issuers. Liquidity is expected to remain adequate to fund near-term maturities needs given current availability under its credit facilities and cash balances. However escalating agricultural commodities prices will likely give rise to higher input cost inflation which will likely pressure operating earnings and cash flow in 2012 and 2013.
JBS S.A. (JBS), Constellation Brands, Inc. (Constellation), ARAMARK Corporation (ARAMARK), Dean Foods Company (Dean), and Pinnacle Foods Finance LLC (Pinnacle) all have large amounts of debt maturing 2013-2015. Most of these firms will have to access capital markets to address these maturities. The ability to refinance significant debt maturities over the next two years is a key rating concern given on-going economic uncertain but markets in general remain accommodating. The stability and the strength of each firm's FCF will likely dictate the terms of their refinancing.
Most companies within the 20-member set reflect past LBOs, significant acquisitions and/or divestitures, or debt-financed shareholder payouts. The names with the best opportunities to deleverage are Constellation, Dean, ARAMARK, Burger King Worldwide, Inc. and ACCO Brands Corp. (ACCO). Those firms less likely to make a material dent in their leverage are those generating low or negative FCF, exhibiting near-term operating earnings pressure, or having an aggressive acquisition strategy. JBS, Pinnacle and Del Monte Corporation are among the companies falling into these categories.
The full report 'High-Yield Food, Beverage, Restaurants and Consumer Products Hand Book - An Examination of Credit Risks and Opportunities' is available at www.fitchratings.com/sectors/Corporate Finance/Leveraged Finance.
For more information, visit: 'www.fitchratings.com/usleveragedfinance'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Food Beverage, Tobacco and Consumer Stats - First Quarter 2011', July 31, 2012;
--'U.S. Food Beverage, Tobacco and Consumer Stats - Fourth Quarter 2011', May 23, 2012;
--'1Q12 U.S. Protein Update: Meat Processors Feel Pressure', Feb. 28, 2012;
--'2012 Outlook: U.S. Packaged Foods Spinoffs Offer Tasty Recipe for Shareholders without Alienating Bondholders', Dec. 7, 2011;
--'2012 Outlook: U.S. Restaurants Credit Risk Is Chiefly Contained as Sales Will Grow but Food Costs Remain Elevate', Dec. 20, 2011;
--'2012 Outlook: U.S. Beverages M&A Activity and Improved Credit Measures Will Drive Ratings in 2012', Dec. 20, 2011;
--'2012 Outlook: U.S. Agribusiness Slowing Global Demand and Mixed Earnings Expectations', Dec. 9, 2011;
--'2012 Outlook: U.S. Commodity Protein, Produce, and Dairy Structural Changes to Continue as Costs Remain High and Europe Will Be a Challenge', Dec. 14, 2011;
--'2012 Outlook: U.S. Consumer Products Emerging Market Growth Not Likely to Offset Developed World Slowdown', Dec. 20, 2011;
--'Corporate Rating Methodology', Aug. 8, 2012;
--'Evaluating Corporate Governance', Dec. 13, 2011;
--'Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers', May 13, 2011.
Applicable Criteria and Related Research: High-Yield Food, Beverage, Restaurant, and Consumer Products Handbook
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=689522
Food, Beverage, Tobacco, and Consumer Stats ??? First-Quarter 2012
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683932
Food, Beverage, Tobacco, and Consumer Stats Quarterly -- Fourth-Quarter 2011
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679151
1Q12 U.S. Protein Update: Meat Processors Feel Pressure
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672357
2012 Outlook: U.S. Packaged Foods
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=658216
2012 Outlook: U.S. Restaurants
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656831
2012 Outlook: U.S. Beverages
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660989
2012 Outlook: U.S. Agribusiness
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=658982
2012 Outlook: U.S. Commodity Protein, Produce, and Dairy
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=658336
2012 Outlook: Consumer Products
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=660590
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460
Evaluating Corporate Governance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=657143
Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686476
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