Moody's affirms General Mills

Moody's Investors Service said it affirmed the Baa2 senior unsecured and Prime-2 short term ratings for General Mills Inc. following the company's announcement that it will repurchase 16.5 million of its shares (worth about $750 million) from Diageo plc, and enter into a three-year forward sale agreement for these shares.

General Mills also announced that a wholly owned subsidiary, General Mills Cereals LLC, will issue $835 million in preferred stock to an affiliate of Lehman Brothers and will upstream the cash proceeds to General Mills. General Mills will use $750 million of the proceeds to fund the share repurchase from Diageo, and $85 million to pay down senior debt.

Moody's said the affirmation of General Mills' ratings reflects the company's strong brand equity, leading market shares, diverse portfolio of packaged food products, and generally strong and stable cash flows. The ratings also reflect the mature and highly-competitive marketplace in which General Mills competes, its relatively high leverage for its rating category, the increasing complexity of its capital structure, and continuing uncertainty surrounding the impact of an SEC investigation into its sales practices and accounting.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.