PRESS RELEASE: S&PBulletin: Vodafone Rtgs Unaffected By U.K. Tax Agreement

29th Jul 2010 15:51

The following is a press release from Standard & Poor's: LONDON (Standard & Poor's) July 29, 2010--Standard & Poor's Ratings Services said today that its ratings and outlook on Vodafone Group PLC (A-/Negative/A-2) are not immediately affected by the company's recent announcement that it will pay GBP800 million in financial 2011 (ending March 31, 2011) and GBP450 million in installments over the following five years (GBP1.25 billion in total) as part of an agreement with the U.K. tax authorities with respect to its Controlled Foreign Company (CFC) tax case. These payments resolve Vodafone's CFC case, which concerned a holding company that was set up for Vodafone's 2000 acquisition of Mannesmann AG, the German phone company, now known as Vodafone D2 GmbH. Although the ratings on Vodafone have little headroom, we anticipate that the group should have the ability and willingness to actively mitigate the immediate cash outflow connected with this tax settlement within the scope of the financial flexibility afforded by its adequate liquidity position, operational measures, and various strategic options. We could lower the ratings if we perceived the outlook for deleveraging on an organic basis over the next 12 months to be poor, or if Vodafone's credit metrics and operating performance were to weaken substantially by the half-year of financial 2011 (which is not our base case), due to operating underperformance based on competition or the effects of macroeconomic weakness. Primary Credit Analyst: Michael O'Brien, London (44) 20-7176-3561; [email protected] Secondary Credit Analyst: Raam Ratnam, London (44) 207-176-7066; [email protected] Additional Contact: Industrial Ratings Europe; [email protected] No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. 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