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DUFF & PHELPS MAINTAINS RJR NABISCO HOLDINGS CORP. & RJR NABISCO, INC. ON RATING WATCH -- UNFAVORABLE

 NEW YORK, April 14 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has stated that the long-term securities of RJR Nabisco Holdings Corp. and RJR Nabisco, Inc. remain on rating watch for potential downgrade. RJR Nabisco, Inc.'s senior debt is currently rated `BBB' (Triple-B) and its subordinated debt `BB+' (Double-B-Plus). Approximately $11 billion of debt is affected.
 D&P believes RJR has taken prudent action with its amended stock offering. While RJR will go ahead with its stock offering of RN-Nabisco group stock, the company will not issue Nabisco Group stock to current shareholders and will delay declaring a dividend on the Reynolds Group stock. In light of a potential price war resulting from Philip Morris' recent shift in strategy for its domestic tobacco operations, these changes should result in improved financial flexibility as compared to the original plan. Nevertheless, the impact on the domestic tobacco environment from PM's actions and proposed sharp increases in federal excise taxes must still be assessed. In addition, the current plan will still result in less free cash flow with the planned common dividend payout exceeding reduced interest expense from the repayment of debt.
 In its amended filing concerning its plan to create separate classes of common stock, RJR stated that it will go forward with its public offering of 93 million shares of RN-Nabisco Group stock or approximately 25 percent of its food business. Expected proceeds of $1.5-$1.7 billion will be used to repay debt. RJR will pay roughly $200 million in common dividends in 1994 under this offering versus approximately $560 million under the original plan. Annual dividends going forward will also be sharply reduced from those initially proposed as long as dividends are not declared on Reynolds Group common stock.
 -0- 4/14/93
 /CONTACT: Thomas P. Razukas, CFA, or Philip T. Maffei, CFA, 212-908-0200, of Duff & Phelps/
 (RN)


CO: RJR Nabisco Holdings Corp. ST: Georgia IN: FOD SU: RTG

PS -- NY068 -- 5755 04/14/93 13:02 EDT
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Publication:PR Newswire
Date:Apr 14, 1993
Words:330
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