Moody's rates Foodcorp notes B2

Moody's Investors Service said it assigned a prospective B2 senior implied rating to Foodcorp Ltd. and a prospective B2 rating to the proposed €175 million issuance of senior secured notes due 2012.

The outlook is stable.

The senior implied rating reflects Foodcorp's solid position in the South African food market with a leading presence in some market segments, the country's favorable macroeconomic environment, the benefits to the company of its BEE status, management's proven track record of product and packaging innovation and the relative stability of its operating profitability, Moody's said.

These strengths, though, are offset by the company's high leverage coupled with limited asset coverage, which may result in a low recovery rate for the company's creditors in a distressed scenario, Moody's expectations of limited cash flow generation going forward and the volatility related to cash interest payments, the agency noted.

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