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Nov 12, 2007 20:08 EEST
ZAGREB (Croatia), November 12 (SeeNews) – Global rating agency Standard & Poor's said on Monday it has placed the 'B' long-term corporate credit rating of Croatia-based food manufacturer and retailer Agrokor on CreditWatch with negative implications following news that the company was short-listed to buy a majority stake in Turkey's largest food retailer Migros Turk.
S&P also placed on CreditWatch with negative implications the 'B' rating on Agrokor’s 150 million euro ($219 million) senior guaranteed secured notes due 2011.
"The CreditWatch placement reflects the uncertainty surrounding the funding of the transaction, the structure of which has not yet emerged," S&P credit analyst Diego Festa said in a statement.
“The combined entity is likely to result in a better business risk profile considering the improved mix in geographies and the higher weighting the food retail business would have in total, with the group's earnings visibility benefiting as result," he added.
"The upside on the credit rating would be remote, however, due to our concerns regarding Agrokor's ability to secure sufficient equity support for the transaction."
The outcome of the CreditWatch status will depend on the next steps that the company takes in respect of the acquisition and its funding.
Agrokor said on Friday that it has been picked as potential buyer to run in the second and final round of the tender for Migros Turk. It disclosed no details on its bid and the tender conditions.
Agrokor owns a majority stake in Croatia's largest retail chain, Konzum, and stores in neighbouring Bosnia and Herzegovina and Serbia, and controls a number of food and beverage producers in those three countries and Hungary. Mineral water Jana, ice-cream Ledo and cooking oil Zvijezda are some of Agrokor's best known brands.
The European Bank for Reconstruction and Development (EBRD) is the sole minority shareholder in Agrokor, as businessman Ivica Todoric owns 91.67% of the company. So far Agrokor has floated corporate bonds on the Zagreb bourse but no shares.
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