Fitch: Kraft Foods on negative watch

Fitch Ratings said it placed Kraft Foods Inc.'s issuer default rating of BBB, senior unsecured debt of BBB, credit facility of BBB, short-term issuer default rating of F2 and commercial paper rating of F2 on Rating Watch negative.

The Rating Watch follows Kraft's proposed offer to buy Cadbury plc for about a 31% premium over Cadbury's closing stock price. While Cadbury's board rejected the proposal, Kraft said it plans to continue its process to combine the two companies due to the strong strategic rationale for the combination, Fitch said.

Kraft's leverage is expected to increase substantially if this combination is consummated, the agency said. Kraft's total debt was $20.2 billion and cash was $1.7 billion on June 30. Based on the proposed offer, Kraft's debt is likely to increase by at least $10 billion to $30 billion, driving the pro forma total debt-to-EBITDA ratio to about 4x, Fitch said.

© 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.