• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
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Announcement:

Moody's places Controladora Comercial Mexicana's ratings on review for upgrade

Global Credit Research - 15 Jun 2012

Mexico, June 15, 2012 -- Moody's de México, S.A. de C.V. (Moody's) has placed Controladora Comercial Mexicana, S.A.B. de C.V.'s (Comerci) corporate family ratings of Ba3 and Baa1.mx under review for upgrade. Moody's also placed Comerci´s senior secured ratings of Ba3 assigned to various bonds and loans under review for upgrade.

Ratings affected:

- Corporate Family Rating (CFR): Ba3 and Baa1.mx (Mexican National Scale) ratings placed under review for upgrade

- First Lien Sr. Secured Restructured MXN5,255 million loans (Tranche 1), Ba3 rating placed under review for upgrade

- First Lien Sr. Secured Restructured MXN3,408 million loans (Tranche 2), Ba3 rating placed under review for upgrade

- MXN4,151 million under Asset Linked Facility (ALF) Tranche A1, Ba3 rating placed under review for upgrade

- MXN1,616 million under ALF Tranche A2, Ba3 rating placed under review for upgrade

- Sr. Secured Restructured MXN1,951 million global bonds due in 2018, Ba3 rating placed under review for upgrade

- Sr. Secured Restructured USD224 million global bonds due in 2018, Ba3 rating placed under review for upgrade

- Outlook changed to rating under review for upgrade from stable

The review was prompted by Comerci's announcement on June 14, 2012 that it has reached an agreement with Costco Wholesale Corporation to sell its 50% stake in Costco de México, S.A. de C.V. (Costco) for MXN10,650 million. The transaction also contemplates an extraordinary cash dividend from Costco de Mexico for approximately MXN2,400 million related to Costco de Mexico's accumulated earnings. Comerci plans to use the proceeds from the dividends and the sale of Costco, totaling around MXN13,050 million, to prepay existing debt. The transaction has been approved by Comerci's board but still requires approval from the antitrust authorities (Cofeco) and will be voted in Comerci's shareholder's meeting on June 29, 2012. Comerci estimates debt prepayments to take place in July and August of 2012 and afterwards refinance debt of approximately MXN3,563 million (the MXN1,457 million Certificados Bursátiles due 2016 would not be refinanced) in September 2012.

This transaction will substantially reduce Comerci's debt and improve its financial flexibility and credit metrics. As of March 31, 2012, Comerci reported total debt of MXN18,079 million which translates into an adjusted debt/EBITDA of 5.25x. Moody's estimates that pro-forma, after the debt prepayment, Comerci's total debt would be around MXN5,020 million. Similarly, we estimate pro-forma Moody's adjusted debt/EBITDA of 2.18x and adjusted EBIT/Interest expense of 3.80x.

During its review, Moody's will assess the likely consummation of the proposed transaction and successful debt repayment as announced. Moody´s will also evaluate Comerci's expected performance and credit profile absent Costco's operation including potential changes in the competitive landscape.

The principal methodology used in rating Controladora Comercial Mexicana, S.A.B. de C.V. was the Global Retail Industry Methodology published in June 2011. Please see the Credit Policy page on www.moodys.com.mx for a copy of this methodology.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable to the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Implementation Guidance August 2010 "Mapping Moody's National Scale Ratings to Global Scale Ratings."

Controladora Comercial Mexicana, S.A.B. de C.V., headquartered in Mexico City, is Mexico's third largest food and general merchandise retailer with revenues of MXN44,100 million in the last twelve months ended March 31, 2012. Comerci operates 199 stores under seven formats with a total selling area of 1.3 million square meters. Comerci has a nationwide presence with about 70% of its selling floor concentrated in the Mexico City metropolitan area and the country's central region. The company is also present in Mexico's family-style convenience restaurant segment, with its "California" and "Beer Factory" restaurants throughout the country. Comerci is family controlled, by the González Nova family, with approximately 36% of its shares traded on the Mexican stock exchange.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity prior to public dissemination

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating. Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

In compliance with regulatory requirements, Moody's de Mexico has been informed that during the two-month period prior to the execution of the rating agreement governing this rating assignment, no other credit rating agency has assigned a rating on the same issuer/securities referred to in this press release.

The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer. Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com.mx for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Alonso Sanchez
Asst Vice President - Analyst
Corporate Finance Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700

Brian Oak
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700

Moody's places Controladora Comercial Mexicana's ratings on review for upgrade
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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