BPC burns, philp & company limited

burns philp rating raised to ‘bb-’, outlook stable

  1. 6,931 Posts.
    This is a long term buy and hold. IMHO

    Burns Philp Rating Raised To ‘BB-’, Outlook Stable
    Melbourne, April 19, 2005—Standard & Poor’s Ratings Services said today that it has raised the rating on
    Burns Philp & Co. Ltd. to ‘BB-’ from ‘B+’. The outlook is stable. The ratings on Burns Philp Capital Pty.
    Ltd.’s subordinated issues are revised to ‘B’ from ‘B-’.
    “The rating upgrade reflects the improvement in underlying financial performance in the six months to Dec.
    31, 2004, as well as the significant debt reduction and resulting improvement in liquidity following the sale
    of the yeast and herbs and spices business units in September 2004,” said Standard & Poor’s credit analyst,
    Brenda Wardlaw, Corporate & Infrastructure Finance Ratings.
    In September 2004, Burns Philp repaid its A$1.55 billion of senior secured credit facilities, using the
    proceeds from the sale of its yeast and bakery ingredients group and herbs and spices division.
    “Consequently, at Dec. 31, 2004, Burns Philp’s operating lease adjusted total debt to total capitalization was
    just below 50%, a significant reduction from 82.5% as at June 30, 2004,” said Ms. Wardlaw. Australia and
    New Zealand are now the company’s principal markets. Although the divestment of the yeast and bakery
    and the Tones Bros. businesses has reduced the company’s geographic and product diversity, their disposal
    has also largely removed the seasonality of Burns Philp’s earnings.
    The former Goodman Fielder businesses, now the sole focus of Burns Philp, have historically generated
    stable cash flows, and benefit from a strong and diversified product portfolio within Australia and New
    Zealand. The company’s underlying operating income to sales margin moderated to 18.4% in the first half of
    2005 from 20.7% in fiscal 2004, reflecting the increased contribution from the lower -margin Goodman
    Fielder business. The three remaining operating segments, namely baking, snacks, and spreads and oils,
    reported significantly improved earnings, reflecting the benefits of restructuring.
    “A key rating factor is Burns Philp’s appetite for debt-funded acquisitions, and management’s comfort with
    a highly leveraged balance sheet, although uncertainty surrounds the size, scope, and location of future
    acquisitions,” added Ms. Wardlaw.
    About Standard & Poor’s
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    www.standardandpoors.com.au.
 
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