Fitch Ratings Affs Embotelladora Andina's `A-' Foreign Currency Rtg.Business Editors CHICAGO--(BUSINESS WIRE)--April 5, 2002 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. affirms its 'A-' foreign currency ratings of Embotelladora Andina's (Andina) bonds due in 2007, 2027, and 2097. The Rating Outlook for these ratings remains Stable. The ratings are supported by Andina's below-average business risk due to the strong demand for Coca-Cola products within its bottling territories and the importance of the company to The Coca-Cola Company, which owns 11% of the company's equity. The ratings also take into consideration the prudence in which Andina has historically pursued acquisition opportunities in the region, and the unlikely prospects for the purchase of new bottling operations during 2002, as a result of the economic uncertainty in the region. Andina's 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 decreased from $170 million in 2000 to $154 million in 2001. The decline was driven by devaluations of the Brazilian real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. and Chilean peso in excess of local inflation levels, as sales volumes increased by 5%. In spite of the aforementioned, Andina's overall debt profile improved marginally during 2001. The company eliminated some of the currency mismatch between its revenues and debt by issuing Chilean peso-denominated bonds worth approximately $170 million during July 2001. It used the proceeds from this issuance plus cash from operations to buy back approximately $203 million of its dollar-denominated Yankee bonds Yankee bonds Foreign bonds denominated in U.S. dollars and issued in the United States by foreign banks and corporations. These bonds are usually registered with the SEC. Such as, bonds issued by originators with roots in Japan are called Samurai bonds. during the year. The company ended 2001 with an EBITDA-to-interest expense ratio of 6.9 times (x) and a gross debt-to-EBITDA ratio of 2.2x. During 2000, Andina's ratios were 6.2x and 1.8x, respectively. The improvement in the company's interest coverage was due to decreased interest expenses, resulting from the local bond issuance and repurchase of the Yankee notes. Andina continues to be extremely liquid, ending 2001 with approximately $363 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 and $343 million of gross debt. During the first three months of 2002, the company repurchased $4.5 million of its Yankee bonds. As a result, the company only has $45 million of its Yankee bonds outstanding. From a credit perspective, it is important to note that during 2001 the company reallocated the funds it was holding in cash and marketable securities, moving most of its large holding from banks in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of to investments in the bonds of Chilean companies This is a list of Chilean companies by field of operation. Media
Due to the economic and political problems in Argentina, 2002 promises to be a challenging year for the company. It is likely that Andina will see the EBITDA that it generates in that country fall from $38 million in 2001 to less than $10 million in 2002. A steadier Chilean peso and Brazilian real could recoup some of this lost EBITDA, but not all. As a result, it is likely that the company's consolidated EBITDA will drop to between $110 million and $130 million during 2002. Credit protection measures should remain relatively constant, however, as debt is likely to decrease as the company continues to buy back its 2007, 2027, and 2097 bonds. With only $25 million of anticipated capital expenditures, free cash flow should exceed $100 million. As a result, Andina's credit profile is expected to remain consistent with the 'A-' rating category during 2002. Andina is the largest Coca-Cola bottler in Chile and one of the largest in Brazil and Argentina. The company's Chilean territory is comprised of the Greater Santiago Region. In Argentina, Andina operates in the provinces of Cordoba cor·do·ba n. See Table at currency. [American Spanish córdoba, after Francisco Fernández de Córdoba (1475?-1526?), Spanish explorer.] Noun 1. , Mendoza, San Juan San Juan, city, Argentina San Juan (săn wän, Span. sän hwän), city (1991 pop. 353,476), capital of San Juan prov., W Argentina. It is a commercial and industrial center in an agricultural region. , San Luis San Luis, city (1991 pop. 110,353), capital of San Luis prov., W central Argentina. The city is the commercial center of an area producing cattle, corn, and asparagus; the surrounding area has timber and mineral resources. San Luis is a popular resort. , Entre Rios, and Santa Fe. Andina has been Coca-Cola's bottler for the city of Rio de Janeiro Rio de Janeiro, city, Brazil Rio de Janeiro (rē`ō də zhänā`rō, Port. rē`  thĭ zhənĕē`r since 1994. Since 2000, the company has also bottled Coca-Cola products in Niteroi, Vitoria, and Governador Valadares. These cities are located in the Brazilian states of Espirito Santo and Minas Gerais. Andina's average 2001 market shares in these territories were 68% (Chile), 53% (Brazil), and 51% (Argentina). In addition to selling soft drinks, Andina bottles and distributes juices and mineral water in Chile and mineral water in Brazil. The company also distributes Kaiser and Heineken beer in Brazil.
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