TRIS Rating has placed the company rating and the senior unsecured debenture rating of Berli Jucker PLC (BJC) on CreditAlert with “developing” implication. The rating action follows the announcement by BJC on 7 August 2014 that it plans to acquire 100% of Metro Cash & Carry Vietnam Limited (METRO Vietnam) from Metro Cash & Carry International Holding BV. The acquisition is worth €655 million (or Bt28,370 million). The transaction will be subject to certain conditions precedent, including approval by BJC’s shareholders at an Extraordinary General Meeting scheduled on October 2014.
METRO Vietnam is a leading modern-trade wholesaler in Vietnam. Its operation started in 2002, and now has 19 cash & carry stores across 14 cities. For the fiscal year ended 30 September 2013, METRO Vietnam generated sales of about Bt22,000 million and reported earnings before interest, tax, depreciation, and amortization (EBITDA) of almost Bt500 million.
The acquisition of METRO Vietnam is in line with BJC's strategy to become a leading regional wholesaler and retailer covering the entire value chain. The expected benefits of the acquisition include access to the large Vietnamese grocery market, and positioning BJC for further successes in the ASEAN Economic Community. The transaction will enhance BJC's strengths and competitive position once BJC completes and succeeds in the post-merger integration of METRO Vietnam. However, this sizable investment could negatively affect BJC’s financial profile in the medium term if the acquisition is funded entirely with new debt. BJC’s board of directors meeting is scheduled on 19 August 2014 to finalize the financing structure.
TRIS Rating will resolve the CreditAlert of BJC after the transaction is completed and a comprehensive review of the company’s business strategy and financial arrangement can be made. The final rating action will take into consideration BJC's financial profile post-acquisition and the expected return from the transaction.
TRIS Rating Co., Ltd./www.trisrating.com Contact: santaya@trisrating.com, Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand Copyright 2014, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.