Fitch affirms Kamps rating

Fitch Ratings said it removed Kamps AG's BB senior unsecured rating from Rating Watch positive and affirmed the rating. The outlook is now positive.

Fitch said this action reflects Kamps' lower leverage during 2003 as well as the expected persistence of a difficult macroeconomic context in Germany and the execution risk and expected cash absorption linked to the company's "Transformation Project" announced last November.

Kamps benefited from the support of its shareholders in various ways in 2003. The risk of a capital outflow of more than €400 million in relation to Kamps' put option to purchase the 51% of French bakery group Harry's was avoided after the option was exercised by Kamps' majority shareholder Barilla and other financial investors. Furthermore, the shareholders paid Kamps €225 million cash and €75 million in the form of a vendor loan (maturing in 2008) for the more than 49% of Harry's, thus allowing Kamps' net debt position to improve.

Fitch said that given Kamps' poor track record of delivering on similar rationalization plans in the past, the "Transformation Project" could appear ambitious. However, Fitch said it takes comfort from the support that the new shareholder Barilla may provide throughout the process, sharing its successful track record in managing brands and in running larger plants.

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