Moody's: ThaiBev to benefit from Fraser & Neave spin-off plan

Hong Kong, August 29, 2013 -- Moody's Investors Service says that Thai Beverage Public Company Ltd's (Baa3, stable) credit profile will benefit from Fraser & Neave's (F& N, unrated) proposal to spin off its property business.

F& N -- which is 28.61% owned by ThaiBev and 61.67% by TCC Assets -- will separate its real estate division from its core food & beverage business through a listing in November or December 2013.

Moody's believes the spin-off will facilitate moves by ThaiBev to better leverage revenue and cost synergies with F& N's food & beverage business, while the latter -- in the absence of its property business -- can better focus on expanding.

Moody's further believes that the proposed spin-off shows that TCC Assets seeks to more closely integrate, where possible, the operations of ThaiBev and F& N.

" We believe the latest development shows that ThaiBev and TCC Assets seek to maximize synergies between ThaiBev and F& N's core businesses, including leveraging each other's regional distributional networks, product development capabilities, and portfolio of leading beverage brands ," says Annalisa DiChiara, a Moody's Vice President and Senior Analyst.

" Given that TCC Assets has notified F& N that it will vote in favor of the spin-off and in view of senior management restructuring at F& N for the purposes of a more dedicated focus on growing the food & beverage business, we expect TCC Assets to continue supporting additional restructuring to most efficiently integrate the two companies' food & beverage businesses. This may even include their full consolidation over time," adds DiChiara.

" Previously, we raised concerns over the lack of clarity in regard to shareholder intentions. But now we see that the aim is to better align ThaiBev and F& N in their growth strategies and business opportunities. And while we cannot at this stage quantify the benefits, we believe that ThaiBev will strengthen its competitive and financial positions over time" , adds DiChiara.

Assuming all regulatory and shareholder approvals are obtained, the listing of F& N's property unit, Frasers Centrepoint Limited (FCL, unrated), will be achieved via a dividend in-specie distribution of FCL shares to F& N shareholders. As a result, ThaiBev will receive, at no cost, two FCL shares for every one F& N share it owns.

After the completion of the proposed transaction, F& N will no longer have any interest in FCL, leaving the Asian conglomerate with its food and beverage business (84% of sales) and printing and publishing businesses (16% of sales).

F& N and FCL will trade separately on the Singapore Exchange upon the listing of FCL.

Further, on August 28, ThaiBev also announced the appointment of a financial advisor to conduct a strategic review to consider various options, including the viability of retaining or exchanging its interests in the F& N group and other possible ownership structures.

The principal methodology used in this rating was the Global Alcoholic Beverage Rating Methodology published in September 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Thai Beverage Public Company Ltd is the leading beverages producer in Thailand. It operates four business lines: spirits, beer, non-alcoholic beverages and food. ThaiBev was listed on the Singapore Exchange in 2006.

Annalisa Di Chiara
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
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China (Hong Kong S.A.R.)
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Philipp L. Lotter
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077