Fitch Affirms 'BBB-' Credit Ratings of Mexican Bottler Bepensa.Business Editors CHICAGO--(BUSINESS WIRE)--April 4, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'BBB-' foreign and local currency rating of Bepensa S.A. de C.V. (Bepensa). The Rating Outlook remains Stable. Bepensa is The Coca-Cola Company's (Coca-Cola) bottler in the Mexican states of Yucatan, Campeche and Quintana Roo Quintana Roo (kēntä`nä rō`ō), state (1990 pop. 493,277), 19,630 sq mi (50,842 sq km), SE Mexico, on the Caribbean. Chetumal is the capital. - collectively referred to as the Yucatan Pensinsula. Bepensa's investment grade credit ratings are supported by its excellent business position and strong financial profile. Bepensa ended 2002 with an estimated soft drink market share of approximately 80 percent within its bottling territories. The company's dominance is a result of its elaborate distribution systems, its excellent point-of-sale execution skills, and the strong demand for Coca-Cola products in the region, which is a result of the efforts of the company during the past 55 years. Bepensa compliments its soft drink business with a rapidly growing water business. Since 1993, the company's sales of purified water Purified water can come from any source, including spring water, well water, seawater, or municipal water. This source water is then processed by reverse osmosis or deionization to produce a water that is indistinguishable from distilled water from any other source. have grown from 13 million unit cases (one unit case equals 24 eight ounce servings) to 191 million unit cases. The company's solid business position is matched with an equally strong financial position. During 2002, Bepensa generated approximately $108 million of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become from the sale of 191 million unit cases of water and 110 million unit cases of soft drinks. With $56 million of debt, of which $1 million comes due in 2003, and $50 million of cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , liquidity is not a concern. Bepensa's interest coverage, as measured by EBITDA-to-interest expense, was 19.1 times (x) during 2002 and its leverage ratio, as measured by total debt-to-EBITDA, was 0.6x. These credit-protection measures are strong for the rating category. Like other bottlers in Mexico, Bepensa is susceptible to swings in the Mexican peso to U.S. dollar exchange rate, given the company's peso-denominated revenues and dollar-denominated debt obligations. In addition, unlike some of the largest bottlers in the region, Bepensa only operates in one country. This makes the company vulnerable to political or macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. turbulence turbulence, state of violent or agitated behavior in a fluid. Turbulent behavior is characteristic of systems of large numbers of particles, and its unpredictability and randomness has long thwarted attempts to fully understand it, even with such powerful tools as in Mexico. Fitch expects Bepensa to generate about $110 million of EBITDA in 2003. With capital expenditures expected to be approximately $65 million, taxes expected to be $30 million and interest expense expected to be approximately $3 million, the company will have approximately $10 million of free cash flow that it can use to reduce debt. |
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