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Fitch Rates Altria's $775MM Guaranteed Sr. Notes Offering 'BBB+'; Outlook Stable

  //house-home.news-articles.net/content/2008/12/1 .. anteed-sr-notes-offering-bbb-outlook-stable.html
  Published in House and Home on Thursday, December 18th 2008 at 13:03 GMT by Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has assigned a 'BBB+' rating to Altria Group, Inc.'s (NYSE: MO) $775 million guaranteed fixed-rate senior notes maturing in 18 months. The notes rank pari passu with Altria's other senior debt. This offering follows a Nov. 10, 2008 issuance of $6 billion of guaranteed senior unsecured notes. Altria plans to use the proceeds to fund a portion of its $11.7 billion purchase of UST Inc., including the assumption of UST debt. The acquisition is expected to close early January 2009. The notes are being issued under the company's indenture dated Nov. 4, 2008, and significant covenants include, but are not limited to, limitations on liens and restrictions on sale leaseback transactions. The series of notes will carry a change of control provision allowing holders to put the bonds back to Altria as well as a coupon step up provision in the event of ratings downgrades below investment grade.

At Sept. 30, 2008, Altria's total debt was approximately $885 million. Fitch's ratings for Altria and its subsidiary are as follows:

Altria

--Issuer Default Rating (IDR) 'BBB+';

--Guaranteed bank credit facilities 'BBB+';

--Guaranteed senior unsecured debt 'BBB+';

--Short-term IDR 'F2'

--Commercial paper (CP) 'F2'.

Philip Morris Capital Corp.

--IDR 'BBB+';

--Senior unsecured debt 'BBB+';

--Short-term IDR 'F2';

--CP 'F2'.

The Ratings Outlook is Stable.

For the twelve months ended Sept. 30, 2008, Altria's credit statistics on a pro-forma basis were in line with Fitch's expectations. Total debt-to-operating earnings before interest, taxes, depreciation and amortization (EBITDA) was approximately 2.2 times (x), operating EBITDA-to-gross interest expense was about 4.8x, and operating EBITDA margin was roughly 27.3%.

For further information, please review Fitch's press release, 'Fitch Affirms Altria's IDR at 'BBB+'; Outlook Revised to Stable,' dated Sept. 8, 2008.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, [ www.fitchratings.com ]. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.