Moody's may cut Constellation Brands

Moody's Investors Service said it placed the ratings of Constellation Brands Inc. under review for possible downgrade after analyzing the preliminary all-debt financing options to affect the reported purchase of The Robert Mondavi Corp. (no rated debt) for $1.4 billion.

On review are Constellation's Ba1 rated $1.23 billion credit facility, Ba2 rated $200 million 8 5/8% senior unsecured notes due 2006, $200 million 8% senior unsecured notes due 2008, £80 million 8½% senior unsecured notes due 2009, £75 million 8½% senior unsecured notes due 2009, Ba3 $250 million 8 1/8% senior subordinated notes due 2012, Ba2 senior implied rating and Ba3 senior unsecured issuer rating.

Given that there is likely to be a lengthy time period before the intended purchase documentation is finalized and executed and given that only cursory projections are available at this time without full disclosure of integration costs, synergies and detailed growth strategies, Moody's said the ratings have been placed under review for possible downgrade.

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