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RJR NABISCO 'BBB' SENIOR DEBT AFFIRMED BY FITCH, TREND DECLINING -- FITCH FINANCIAL WIRE --

 NEW YORK, Sept. 2 /PRNewswire/ -- RJR Nabisco, Inc.'s (NYSE: RN) $9.0 billion "BBB" senior debt, $2.2 billion "BBB-" subordinated debt, $1.3 billion "BBB-" preferred stock and $1.0 billion "F-2" commercial paper are affirmed by Fitch. The action follows today's announcement that the domestic tobacco business unit's 1993 contribution (operating income before amortization of trademarks and goodwill) to the parent could be reduced by approximately $900 million. The credit trend is changed to declining from stable.
 In early April, Philip Morris announced that it was reducing the price of its premium brands an action it estimated would reduce its domestic tobacco earnings by approximately 40 percent. At that time, RJR Nabisco responded by lowering its prices in line with competition. RJR Nabisco earned $2.1 billion from its domestic tobacco unit in 1992. RJR's announcement estimating full year 1993 operating earnings decline of $900 million from its domestic tobacco unit is in line with the earlier 40 percent estimates of profit erosion stemming from the price war.
 The impact of this decline in tobacco income is mitigated by RJR's continuing strategy to reduce its debt interest cost. The next major reduction is scheduled for May 1994, when the remaining subordinated debt becomes callable. As a result, Fitch does not anticipate interest coverage to fall below 2.0 times (x). In addition, RJR successfully spread the maturities of its debt such that despite the reduction in earnings from the tobacco price war, internally generated cash flow is more than adequate to cover debt service without resorting to external sources of capital. In 1992 RJR generated approximately $1.5 billion in net free cash flow. After factoring in some measure of tax savings from the reduced earnings, proforma net free cash flow will adequately cover scheduled debt maturities, which average only $250 million over the next four years.
 -0- 9/2/93
 /CONTACT: Thomas W. Hoens, 212-908-0569, or Robert J. Grossman, 212-908-0535,


CO: RJR Nabisco, Inc. ST: North Carolina IN: TOB FOD SU: RTG

TS -- NY038 -- 8352 09/02/93 10:47 EDT
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Publication:PR Newswire
Date:Sep 2, 1993
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