NEW YORK, May 12 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR)
continues to maintain the ratings of Nabisco Group Holdings Corp. (NGH) and
Nabisco, Inc. on Rating Watch--Uncertain pending the outcome of a possible
sale of NGH or its interest in Nabisco Holdings Corp. (NA), the parent of
Nabisco, Inc. NGH owns approximately 80.6 percent (representing a 98 percent
voting interest) of the total shares outstanding of NA. The remaining shares
of NA are publicly held.
As contemplated under Carl Ichan's most recent offer of $22 per share of
NGH ($19 paid in cash and $3 in a two-year note), total debt at Nabisco, Inc.
would nearly double from about $4.0 billion to $7.5 billion. Existing debt at
Nabisco, Inc. would be repaid with proceeds of $7.5 billion of new financing.
The remaining proceeds would be used to pay a special dividend to NA
shareholders, approximately $2.7 billion of which would go to NGH to partially
fund the acquisition. Such new financing, if obtained, would be of
speculative credit quality. The remainder of the cash needed to purchase NGH
would come from other Ichan-related entities.
NGH is continuing to explore all alternatives to maximize shareholder
value, including the sale of NGH or its ownership stake in NA to other
interested parties in addition to Carl Ichan. As such, the company's ratings
remain on Rating Watch-Uncertain given the potential that another bidder of
stronger creditworthiness could make an offer. Resolution of the Rating Watch
status will require clarity as to the financial and legal implications of a
sale or other transaction related to either NGH or NA. Rating considerations
will include the impact of a proposed deal on NGH's and NA's financial
leverage and the use of cash proceeds received, if any.
Currently, Nabisco, Inc.'s senior unsecured debt and bank credit
facilities are rated 'BBB' (Triple-B). The company's $2 billion commercial
paper program is rated 'D-2' (D-Two). Rated debt outstanding at December 31,
1999 totaled approximately $4 billion. NGH's approximate $100 million of
trust preferred securities are rated 'BBB-'
(Triple-B-Minus). NGH holds more than $100 million in high-grade commercial
paper that is intended but not required to be used for interest and principal
payments on the trust securities. The trust securities are subject to a
mandatory redemption in 2003.
For additional research on Nabisco, visit DCR's Web site at
http://www.dcrco.com (Quick Search: Nabisco). DCR's research is also
available on Bloomberg at DCR and First Call's BondCall Direct/Research
Direct at http://www.firstcall.com, as well as through other third-party
providers.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Jenifer Casalvieri, 212-908-0239,
casalvieri@dcrco.com, or Wesley Moultrie, CPA, 312-368-3186,
moultrie@dcrco.com, or Thomas P. Razukas, CFA, 212-908-0223,
razukas@dcrco.com, all of DCR
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