Fitch Ratings Affirms Pipasa And As de Oros At `BB'.

Business Editors

CHICAGO--(BUSINESS WIRE)--March 4, 2002

Fitch Ratings has affirmed the 'BB' foreign currency debt rating on Corporacion Pipasa's senior notes due 2005 and Corporacion As de Oros senior notes due 2005, jointly and severally guaranteed by Rica Foods, Inc. (Rica Foods). The Rating Outlook remains Stable.

Corporacion Pipasa (Pipasa) and Corporacion As de Oros (As de Oros) are wholly owned subsidiaries of Rica Foods and operate in Costa Rica, representing the vast majority of Rica Foods revenues and EBITDA. On Jan. 16, 2001, Rica Foods assigned, transferred and conveyed all of its former rights and obligations under the note purchase agreement with Pacific Life Insurance Company (Pacific Life) to Pipasa and As de Oros and provided a guarantee on a joint and several basis.

The rating is supported by Pipasa and As de Oros leading market position in the Costa Rica poultry industry, as well as in animal feed and poultry by-products. The two companies combined account for over 70% of the broiler chicken market in Costa Rica and are also the leaders in the animal feed market with a 31% market share. The companies own a strong distribution network within Costa Rica. Through their fleet of 260 delivery trucks they deliver products to over 44,000 points of sale, including their own chain of 78 urban and retail outlets. Fitch believes that the companies' broad distribution network and strong brand recognition act as entry barriers to potential competitors. In addition, consumer's preference for fresh chicken as opposed to frozen chicken, coupled with tariff protections, restrict imports of chicken into Costa Rica.

Costa Rica's poultry industry enjoys attractive and relatively stable fundamentals. Per capita consumption of chicken has grown from 15.7Kg in 1994 to 20.3Kg in 2000, driven by social-economic factors such as an increasing participation of women in the labor market and resulting demand for easy-to-prepare meals, coupled with a change in eating habits to leaner and healthier foods. Over the past several years, Costa Rica has enjoyed a relatively stable economic and political environment, although over the past year, economic growth has slowed down. GDP growth decreased from 8.3% in 1999 to 2% in 2000 and 0.5% in 2001.

The economy slowdown has had a negative effect on the companies' business and has led to certain strategic changes, which include a reduction in prices, a shift in the product mix to include lower priced products, and increased volume discounts. These factors, in turn, have impacted EBITDA margins and credit statistics. For the fiscal year period ended Sept. 30, 2001, Rica Foods' revenues totaled $127.3 million and EBITDA (earnings before interest, taxes, depreciation, and amortization) reached $14.1 million, a growth of 3% and 2.4% respectively from the 1999 fiscal period. Rica Foods recorded export revenues of $4.4 million during fiscal 2001, primarily in connection with sales of animal feed and chicken by-products to Central America and the Caribbean. Rica Foods' financial profile remains consistent with the rating category, with leverage at Sept. 30, 2001, of 3.3 times (x) (total debt as a multiple of last 12 months EBITDA) and a ratio of EBITDA-to-gross interest expense of 3.0x for the fiscal year ended Sept. 30, 2001.

Last Dec. 28, 2001, Rica Foods announced that the company did not meet certain negative covenants in its amended and restated note purchase agreement between Rica Foods and Pacific Life. These violations, of a technical nature, did not involve the failure to pay any sums due to Pacific Life under the note purchase agreement. Rica Foods has remained current on all payments due to Pacific Life and all other creditors. Subsequently, Rica Foods obtained from Pacific Life a waiver of breaches of certain covenants contained in the note purchase agreement.

On Jan. 8, 2002, a securities class action lawsuit was filed in Florida on behalf of all persons who acquired Rica Foods' common stock between Jan. 16, 2001, and Dec. 28, 2001, alleging Rica Food's failure to disclose non-compliance with the note purchase agreement. Fitch believes that the potential punitive damages to Rica Foods in connection with the class action suit are limited and would not impact significantly its credit quality.

Rica Foods is the largest poultry producer in Costa Rica. The company produces and sells fresh and frozen poultry, processed chicken products, commercial eggs and concentrate for livestock and domestic animals mainly through its subsidiaries Pipasa and As de Oros. The company has over 30 years of experience in the poultry business and produces and markets over 600 different products in the domestic and export markets. The company is publicly traded in Amex.