Coca-Cola FEMSA completes $200 million debut Yankee issue through J.P. Morgan.

NEW YORK--(BUSINESS WIRE)--Oct. 28, 1996--Coca-Cola FEMSA, the fourth largest Coca-Cola bottler in the world, with operations in Mexico and Argentina, today issued $200 million of 10-year 8.95% notes through lead manager J.P. Morgan. The issue was the company's first Yankee bond issue.

The notes, due November 1, 2006, were priced at 99.961 to yield 8.956 or 240 basis points over the 10-year U.S. Treasury note. Interest on the notes is payable semi-annually on November 1 and May 1 of each year, commencing May 1, 1997. The pricing marked the first time a Mexican corporate borrower has priced an SEC-registered unsecured bond issue below the sovereign yield curve.

The issue is rated BB+ by Standard & Poor's Corporation, marking the first time a Latin American issuer has received a higher rating than its principal country of operations. Additionally, S&P has given Coca-Cola FEMSA a corporate credit rating of BBB. Moody's Investor Service rated the issue Ba2, the same rating as Mexico's sovereign debt, and expressed that this rating is actually capped by Mexico's own Ba2 rating. J.P. Morgan acted as advisor to Coca-Cola FEMSA in the rating agency process.

"The challenge of this issue was not simply to convince investors of the excellent credit quality of Coca-Cola FEMSA. The challenge was to successfully market the transaction in such a manner that it appealed to three distinct groups of investors -- investment grade, high yield, and emerging markets -- in order to achieve the greatest price tension and the tightest spread," commented Simon Noble, vice president in J.P. Morgan's Latin America debt capital markets group.

John Massad, head of syndicate at J.P. Morgan, added "The market's appreciation for the strength of the Coca-Cola FEMSA credit coupled with its importance to The Coca-Cola Company resulted in a more than two-times over subscribed issue placed with a broad base of investors and priced at a spread below the initial price talk."

Co-managers for the issue were Bear Stearns and Morgan Stanley.

Coca-Cola FEMSA is operated as a joint venture between The Coca-Cola Company (30%) and FEMSA (51%), a leading Mexican beverage company with a strong presence in the beer market. The remaining 19% of the company is listed on the Mexican and New York stock exchanges. Coca-Cola FEMSA was the first and one of only two "anchor" bottlers in the fast-growing consumer markets of Latin America, and is one of only eight anchor bottlers in the world. The Coca-Cola Company selects its anchor bottlers based on management, operating, and financial strengths that would enable them to successfully expand Coca-Cola's territorial coverage through acquisitions.

In spite of difficult economic conditions in Mexico and Argentina following Mexico's 1994 currency devaluation, Coca-Cola FEMSA has had an impressive operating performance, gaining market share and improving margins from its low point earlier this year. Revenues reached $800 million in 1995, and grew 12% in the third quarter 1996 compared to the same period last year. Cash flow as measured by EBITDA has grown at a compounded annual growth rate of 17% since 1992, and reached $122 million in the last 12 months ended September 30, 1996.

Latin America is a high priority for The Coca-Cola Company given the region's large, young population, high per capita consumption of carbonated soft drinks, and improving macroeconomic environment. In the first half of 1996, Coca-Cola FEMSA sold 21% of Coca-Cola's total volumes in Mexico and 43% of its volume in Argentina, which amounts to 12% of Coca-Cola's total volume sales in Latin America and 3% of its total worldwide sales. Coca-Cola FEMSA's Valley of Mexico is the single-largest Coca-Cola bottler territory in the world in terms of population, and per capita carbonated soft drink consumption in Mexico is the second highest in the world behind the United States alone. Coca-Cola FEMSA's products include Coca-Cola, Diet Coke, Sprite, Fanta, Quatro, Fresca, and Lift.

CONTACT: Elizabeth Ross, 212-648-9539

http://www.jpmorgan.com