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I AGREE
28 Mar 2011
Approximately $600 million in rated debt affected
New York, March 28, 2011 -- Moody's Investors Service today upgraded Tupperware Brands Corporation's
("Tupperware") ratings to investment grade including the company's
senior secured bank credit facilities to Baa2 from Baa3. Moody's
withdrew the company's Ba1 Corporate Family Rating, Ba2 probability
of default rating, and SGL-2 speculative grade liquidity
rating consistent with Moody's ratings practice for investment grade issuers.
The rating outlook is stable. This rating action concludes a review
for possible upgrade that was initiated on February 1, 2011.
The following ratings of Tupperware were upgraded:
- $200 million senior secured revolving credit facility
to Baa2 from Baa3; and
- $405 million senior secured term loan facility to Baa2
from Baa3.
The following ratings of Tupperware were withdrawn (including LGD assessments):
- Corporate Family rating of Ba1;
- Probability of Default rating of Ba2; and
- Speculative Grade Liquidity rating of SGL-2.
RATINGS RATIONALE
The upgrade of Tupperware's ratings to investment grade reflects
its stable operating performance and significant balance sheet deleveraging
since its 2005 acquisition of Sara Lee's direct selling business
driven by its strong track record of product innovation and expansion
into high potential emerging markets. The Baa2 ratings of bank
facilities reflect the secured pledge of substantially all of the tangible
and intangible assets and would have been one notch lower without this
secured pledge. Tupperware has no outstanding unsecured debt.
"Tupperware's favorable competitive position in attractive
direct selling emerging markets is a key driver of its above average organic
growth and should continue to drive strong profitability,"
says Moody's Vice President and Senior Credit Officer Janice Hofferber,
CFA. "In addition, Tupperware's conservative
debt management and financial policies, including a balanced share
repurchase program and dividend payout, is consistent with its investment
grade rating," adds Ms. Hofferber.
Accordingly, we expect Tupperware's credit metrics to remain
well-positioned with low leverage (1.7 times at December
31, 2010), a large fiscal year-end cash balance,
and anticipated good free cash flow in 2011 of at least $150 million.
We expect future share repurchases will be dependent upon the company's
ability to meet its cash flow targets during the year and dividend policies
will not meaningfully deviate from demonstrated earnings growth.
The ratings also take into consideration the company's moderate scale,
relatively narrow product diversification and share in the broader consumer
product, cosmetics and personal care sectors, ongoing growth
challenges in mature direct selling markets (Europe and the U.S.),
and its exposure to volatile raw material costs and currency exchange
rates,.
The stable outlook reflects our expectation that Tupperware's operating
performance will continue to achieve above-average organic growth
relative to other consumer products companies, consistently generate
free cash flow and maintain strong, investment grade credit metrics.
Tupperware's ratings could be upgraded if the company can maintain its
strong operating performance in an environment of large competitors and
volatile macro-economic conditions especially in certain emerging
markets while sustaining strong credit metrics, including EBITA
margins approaching 16% and/or retained cash flow to net debt ratio
above 30%. Tupperware financial policies regarding share
repurchases and debt-financed acquisitions will also need to remain
conservative.
Tupperware's ratings could be downgraded if global macro-economic
or competitive conditions resulted in lower profits and cash flows,
or if the company adopted more aggressive financial policies such that
its debt to EBITDA ratio was sustained above 3.0 times, EBITA
margins were sustained below 12% or its interest coverage ratio
was sustained below 4.0 times.
The last rating action for Tupperware was on September 12, 2008
when Moody's upgraded the company's Corporate Family rating to Ba1
from Ba2.
The principal methodology used in this rating was Global Packaged Goods
Industry published in July 2009.
Headquartered in Orlando, Florida, Tupperware Brands Corporation
(NYSE: TUP) is a direct seller of premium food storage, preparation,
serving items and cosmetics and personal care products with sales in almost
100 countries worldwide. Tupperware's distribution system for its
storage business includes 1,800 distributors, 58,700
managers and 1.2 million dealers worldwide. In addition,
the company's beauty business commands a direct sales force over 1.1
million.
For the fiscal year ending December 25, 2010, sales were approximately
$2.3 billion.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
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independent third-party sources. However, Moody's
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validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service 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.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Janice Hofferber, CFA
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Upgrades Tupperware's Ratings to Investment Grade
No Related Data.
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