REPEATING/S&P Expects to Rate TNT Post Group 'A' After Demerger.

LONDON--(BUSINESS WIRE)-- Standard & Poor's CreditWire 6/4/98 -- Standard & Poor's expects to assign its single-'A' corporate credit rating with a positive outlook to Netherlands-based TNT Post Group N.V., upon full completion of the demerger process from KPN, which is expected in June 1998.

KPN, the primary postal and telecommunications company in the Netherlands, is demerging its mail, express, and logistics businesses to TNT Post Group. The rating is based on the proposed capital structure that is subject to shareholder approval.

The rating reflects the Group's very strong position in the Dutch mail business and its good position in the global express and logistics businesses, combined with an above average financial profile.

TNT Post Group's rating is underpinned by its stable and cash generative mail business, which contributed 47% of the Group's Dutch guilder (NLG) 15.27 billion revenues and 73% of its NLG2.14 billion EBITDA in 1997. The mail division's strong22% EBITDA margin reflects its good level of operating efficiency.

TNT Post Group is also one of the four major global players in the growing international express business through its recently acquired TNT brand, and has particular strength in Europe and Asia. This division contributed 41% of the Group's revenues and 19% of EBITDA. However, due to the express industry's highly competitive and capital intensive characteristics, TNT also considerably increases the Group's overall business risk and dilutes somewhat the benefits derived from its position in mail.

TNT Post Group's financial profile is conservative and very solid for the rating category. Adjusted for leases, funds generated from operations in 1997 covered outstanding net debt, and net debt to total capital, including reserves, was under 20%.

The government holds 44% of TNT Post Group, but given its hands-off approach, the possibility of direct support is not factored into the rating.

OUTLOOK: Positive. TNT Post Group expects to be able to improve business performance, particularly through improvement of margins in the express business coupled with growth and increased automation in mail services. Demonstration of this, together with the maintenance of a conservative credit profile, could warrant an upgrade of the rating, Standard & Poor's said. -- CreditWire

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