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RJR NABISCO $5.2 BILLION SENIOR DEBT UPGRADED TO 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

    RJR NABISCO $5.2 BILLION SENIOR DEBT UPGRADED TO 'BBB' BY FITCH
                       -- FITCH FINANCIAL WIRE --
    NEW YORK, Dec. 12 /PRNewswire/ -- RJR Nabisco, Inc.'s $3.7 billion senior debt is upgraded to 'BBB' from 'BB+' by Fitch.  The upgrade reflects the successful issuance of $2 billion of PERCS, the exchange of substantially all of its existing preferred for common, and the anticipated closing of a new and more favorable bank credit agreement next week which is not expected to be designated as a highly leveraged transaction (HLT).
    Also upgraded are RJR Nabisco Capital Corp.'s $1.5 billion senior notes to 'BBB' from 'BB+' and $5.2 billion subordinated debt to 'BBB-' from 'BB-', and RJR Nabisco Holding Corp.'s $520 million senior converting debentures and approximately $100 million preferred stock to 'BBB-' from 'B+'.  These ratings reflect Fitch's expectations of RJR's operating and financial performance over the next several years, most importantly its favorable industry positions and strong and stable free cash flow generating ability, as well as management's commitment to further reduce debt leverage.
    The pending U.S. Supreme Court case Cippilone v Liggett Group, et al. (See Fitch special report dated April 3, 1991) is of continuing concern.  All of Fitch's tobacco company ratings remain on FitchAlert with evolving implications pending resolution of this matter.  The case is expected to be reargued in January and decided in the first or second quarter of 1992.  An adverse decision could increase the number of lawsuits and could potentially result in lower ratings for RJR and the other tobacco companies due to increased litigation, advertising and packaging costs.
    Since the time of the LBO, RJR has operated under restrictive covenants imposed by the bank credit agreements of 1989 and 1990.  To conduct its business, RJR had to seek waivers and amendments from as many as 117 banks around the world.  Following several successful major initiatives designed to reduce its leverage, RJR has negotiated a bank credit agreement reflective of its return to investment grade and non -HLT borrower status.
    Representatives of the senior managing agents for the new bank line have indicated that they expect the line not to be characterized as an HLT. The senior managing agents are: Bankers Trust Co., Chase Manhattan Bank, Citibank, Fuji Bank, and Manufacturers Hanover Trust Co.  The company's new bank facility will close on or before Dec. 20.
    Fitch expects RJR to continue reducing leverage while pursuing acquisition opportunities in the food and international tobacco areas which do not threaten its financial recovery.
    RJR is the second largest tobacco company in the United States, and, through its Nabisco Foods Group, ranks as one of the world's largest packaged foods companies.
    -0-                         12/12/91
    /CONTACT:  For a copy of Fitch's complete report on RJR Nabisco, call Janet Zimmerman, 212-908-0582. For more information, call Thomas W. Hoens, 212-908-0569, or Leah W. Murch, 212-908-0511, both of Fitch/ CO:  RJR Nabisco, Inc. ST:  Georgia IN:  FOD SU:  RTG KD -- NY071 -- 2057 12/12/91 15:14 EST
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Publication:PR Newswire
Date:Dec 12, 1991
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