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Rating Action:

Moody's places Heinz's ratings on review for downgrade on announced sale

Global Credit Research - 14 Feb 2013

Sale to Berkshire Hathaway and 3G Capital will likely result in higher financial leverage

New York, February 14, 2013 -- Moody's Investors Service ("Moody's") placed the Baa2 long-term senior unsecured rating and the Prime-2 short term rating of H.J. Heinz Company ("Heinz") and its subsidiaries under review for downgrade following the company's announcement today that it has agreed to be acquired by Berkshire Hathaway ("Berkshire") and 3G Capital ("3G") in a transaction valued at $28 billion. The transaction is expected to close in the third quarter of 2013, subject to Heinz's shareholder approval and regulatory review.

RATINGS RATIONALE

The review for downgrade reflects the possibility that the proposed transaction, which will be financed in part with new debt, will result in significantly higher financial leverage at Heinz.

Moody's review will focus on the details of the proposed transaction, including financial terms, capital structure, and future financial policy. Moody's will also review the strategic and operating plans under the new ownership.

Under the terms of the agreement, Heinz shareholders will receive $72.50 in cash per each share of the company's common stock, which represents a roughly 20% premium to Heinz's closing share price on February 13, 2013. Berkshire and 3G plan to finance the proposed transaction through a combination of new debt, cash on hand and assumption of existing Heinz debt, which totaled approximately $5 billion at the end of October 2012. Following the closing of the transaction, Heinz will remain headquartered in Pittsburgh and operate as a private company.

Ratings placed under review for downgrade:

H. J. Heinz Company:

Senior Unsecured at Baa2;

Senior unsecured shelf at (P)Baa2;

Backed Senior Unsecured at Baa2;

Backed LT IRB/PC at Baa2.

H.J. Heinz Finance Company:

Backed Senior Unsecured at Baa2;

Preferred Stock at Ba1;

Backed Commercial Paper at P-2.

H.J. Heinz Finance UK PLC:

Backed Senior Unsecured-Domestic Currency at Baa2.

Headquartered in Pittsburgh, PA, Heinz is a leading marketer and producer of branded foods in ketchup, condiments, sauces, meals, soups, snacks and infant foods. Key brands include Heinz® Ketchup, sauces, soups, beans, pasta and infant foods, Ore-Ida® French Fries and roasted potatoes, Smart Ones® meals and Plasmon® baby food. For the last twelve month period ended October 2012, Heinz generated sales of approximately $11.6 billion. Heinz operates in over 200 countries and employs 32,000 people worldwide.

The principal methodology used in this rating was Global Packaged Goods published in December 2012.Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain 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 certain 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 certain 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.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Brian Weddington, CFA
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's places Heinz's ratings on review for downgrade on announced sale
No Related Data.

 

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