***Alert***Alert*** Do not read on unless Belgian***Alert***Alert***
(Terms & conditions from ABInbev)
ABInbev’s delayed rights issue looks delayed no longer. The Belgian brewer, which completed its $52bn takeover of Anheuser-Busch last week, said it will attempt to raise as much as €6.36bn in a rights issue for the purposes of paying down debt generated by its mega-merger.
You can read the statement here, unless of course you are American, Canadian, Australian or Japanese. But everyone else can read the Reuters story:
BRUSSELS, Nov 24 (Reuters) – Anheuser-Busch Inbev launched a planned eight-for-five rights issue on Monday to part-fund the $52 billion purchase of U.S. Budweiser brewer Anheuser-Busch at a steep discount of 6.45 euros per shares. The issue of 986.1 million new shares, intended to raise $9.8 billion, will run from Nov. 25 until Dec. 9, 2008. In euro terms, the total size is 6.36 billion euros, given that InBev had pre-hedged its euro/dollar exposure at $1.5409, against the current rate of around $1.25. The Belgium-listed brewer, whose shares closed at 20.6 euros on Friday, said in a statement that it expected total net proceeds after costs and expenses to be 6.26 billion euros. ABInbev’s controlling shareholders will subscribe to 2.8 billion euros in new funds. The company also said that an accelerated placement of up to some 1.2 billion of ex-rights ABInbev shares was being launched on Monday on behalf of the Belgian shareholders and Sebastien holdings.
BNP Paribas, Deutsche Bank and J.P. Morgan are acting as Joint Global Coordinators and Joint Bookrunners of the offering.
Of course, Inbev had originally planned to carry out the cash call last month, but was forced to delay on account of volatile financial markets.
So does ABInbev believe markets have now stabilised? Hardly. The company still has six months until its $9.8bn equity bridge facility expires. If anything the move suggests ABInbev only expects markets to get worse. Knocking down its debts could also improve its standing with the ratings agencies.
In October, Fitch downgraded the BUD component of the newly combined entity on debt related concerns.
The equity bridge facility has a post-closing maturity of six months, within which period InBev may tap the equity markets at any time. The controlling shareholder of InBev is Stichting InBev, a foundation organized under the laws of the Netherlands, which represents an important part of the interests of the Belgian founding families of InBev (mainly represented by EPS) and the interests of the Brazilian families, previously shareholders of AmBev(represented by BRC). Stichting InBev owns approximately 60.8% of InBev’s shares. The entity has confirmed its intention to subscribe for EUR 1.2 billion of new funds when the rights offering proceeds.
Fitch’s downgrade of BUD reflects a combined company that initially will be levered beyond the rating but also a company that has demonstrated financial discipline, an ability to absorb and profit from a large acquisition (AmBev), and strong fundamentals to maintain a leadership position in a consolidating global beer market. In order to lower leverage, InBev will: issue equity; sell assets raising at least $7 billion; use its free cash flow to reduce debt; eliminate share repurchases; and maintain a lower dividend payout. Fitch Ratings expects the combined company’s credit measures to be at acceptable levels (debt/EBITDA at 3.0-3.5x) for the rating by 2011 year-end.
At least €2.8bn of the €6.36bn cash call will come from ABInbev’s key shareholders — €1.3bn from the Belgian families and €1.5bn from the Brazilian families who together previously controlled InBev. Over and above that €2.8bn the families intend to fund further purchases with the sale of remaining nil-paid rights.
Meanwhile, any notion Anheuser-Busch is still an American company can be further dispelled. This from today’s announcement:
NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, AND JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE.
The subscription for the Rights will be open to the public solely in Belgium.
Related link:
The ABinBev release, unrestricted – Long Room
Inbev sells Labatts to clear Anheuser deal – FT.com
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