Share Search
Visit the Share Search
You are here:
The following is a press release from Moody's Investors Service: London, 21 July 2010 -- Moody's Investors Service has today affirmed the A1 senior unsecured issuer rating of Reckitt Benckiser Group plc and Prime-1 short-term rating of Reckitt Benckiser Treasury Services plc following the group's announcement of its cash offer for the entire share capital of SSL International plc (SSL). The rating outlook remains stable. The offer values SSL's share capital at GBP2.54 billion and the rating agency expects the acquisition to be funded through Reckitt Benckiser's new GBP1.25 billion loan facility, as well as other committed new and existing credit facilities, whilst preserving a comfortable liquidity profile. Moody's positively notes that the acquisition of SSL makes strategic sense and should improve Reckitt Benckiser's business risk profile through the addition of two new Powerbrands -- Durex and Scholl -- and stronger presence in certain geographical markets such as Japan and China. Moody's expects Reckitt Benckiser's strong financial profile to accommodate this transaction whilst retaining solid credit metrics in line with the current rating category. At the end of fiscal year (FY) 2009, the company had a gross debt/EBITDA ratio of 0.3x (as adjusted by Moody's), although it has a net cash position, which offers it some financial flexibility in the A1 rating category. Furthermore, Moody's notes that Reckitt Benckiser generated GBP1.1 billion of free cash flow in FY 2009. As a result, the rating agency would expect de-leveraging following the SSL acquisition -- should the transaction close in the proposed terms -- to be rapid. The stable outlook continues to reflect Moody's expectation that Reckitt Benckiser's retained cash flow (RCF)/net debt ratio (as adjusted by Moody's) will remain comfortably above 30%. Negative pressure on the rating could evolve in the context of a reduction in RCF/net debt to below the high 20s and an increase in gross debt/EBITDA to over 2x (metrics as adjusted by Moody's). While a positive rating action looks currently unlikely following this transaction, continuously strong credit metrics could exert upward pressure on the rating in the longer term. The last rating action on Reckitt Benckiser was implemented on 9 November 2007, when Moody's assigned the A1 issuer rating to Reckitt Benckiser Group plc following the completion of the company's scheme of arrangement and the establishment of Reckitt Benckiser Group plc as the new top holding company. The principal methodology used in rating Reckitt Benckiser is "Moody's Rating Methodology for the Global Packaged Goods Industry", published in July 2009, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. Headquartered in Slough, England, Reckitt Benckiser Group plc is a global household, health and personal care company. It recorded revenues of GBP7.8 billion in the fiscal year ending December 2009. Copyright 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from reliable sources; however, MOODY'S does not and cannot in every instance independently verify, audit or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy." Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser. (END) Dow Jones Newswires July 21, 2010 13:38 ET (17:38 GMT)