Oct 12 - Fitch Ratings has affirmed the 'B-' Foreign and Local Currency
Issuer Default Ratings (IDR) of Rodopa Industria e Comercio de Alimentos S.A.
(Rodopa) as well as its 'BBB-(bra)' Long-Term National Scale Rating. The Rating
Outlook is Stable.
The ratings affirmation follows the October 11th announcement that Rodopa's
current shareholder, Paulo Bindilatti, agreed to sell the company's ownership to
Selo Consultoria (Selo), a consultant company held by Mr. Sergio Longo, the main
executive of Rodopa. The change of control is not expected to affect the
company's business and financing strategies, as the current management team will
remain in place. Mr. Longo has been part of Rodopa's management since 2010 and
prior to the acquisition was the main decisionmaker of the company.
According to the announcement, the acquisition will be financed by Rodopa's
cash. Concurrent with the change of control, Rodopa issued USD100 million (about
BRL200 million) in unsecured bonds. Most of the issuance proceeds will be used
to repay short-term debt and strengthen Rodopa's liquidity, while a smaller part
will finance the transaction, through the extra dividends distribution.
In Fitch's view, the transaction will not have a material negative effect on
Rodopa's capital structure and is not sufficient to trigger a ratings change.
The company's net leverage is expect to be close to 3.0x by the end of 2012,
higher than the recent 2.2x as of the last 12 months ended June 2012, and the
2.5x previously expected by Fitch. This leverage is still in line with the
current ratings and continues to incorporate the above-average risk of the beef
The issuance should make it easier for the company to meet its short-term
obligations and expansion strategy, which was already incorporated into the
ratings. In June 2012, Rodopa had BRL200 million of adjusted consolidated debt,
including BRL7 million of rental obligation. Short-term debt was BRL160 million,
and the cash and marketable securities position was BRL37 million.
Potential Ratings or Outlook Drivers:
A downgrade may occur in the case of increased leverage over and above Fitch's
expectations as a result of a more aggressive expansion program, deterioration
in the operational margins or weaker liquidity.
The ratings may be positively affected by a sustainable improvement in Rodopa's
business profile, combined with maintenance of conservative leverage, consistent
improvements in liquidity, and manageable amortization schedule.
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and(New York Ratings Team)