Fitch: Hypermarcas view negative

Fitch Ratings said it affirmed Hypermarcas SA's long-term foreign- and local-currency issuer default rating at BB, senior notes due 2021 at BB and third debentures issuance at A+(bra).

The outlook was revised to negative.

The outlook revision reflects concerns about Hypermarcas' ability to recover its EBITDA generation and to deleverage during 2012, according to the agency.

Ratings are under pressure due to the company's weak operating results, high leverage levels and execution risks related to the integration of several past acquisitions, Fitch said.

Ratings reflect Hypermarcas' leading position in the competitive Brazilian consumer products sector, the strength of its brands, the diversification of its product mix and the resilience of the pharmaceutical and personal care industries to economic conditions, the agency noted.

The divestiture of the company's home and food assets enhances its cash position but it is not sufficient to materially change its financial leverage. On a pro forma basis, Hypermarcas' net debt-to-EBITDA ratio would be 3.5 times from the 4.1x reported in the last 12 months. Pressure on Hypermarcas' fourth quarter EBITDA will result in net leverage ending 2011 at about 3.8x, the agency said.

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