Milling & Baking News - January 27, 2009 - 14

Business

Ancient Grains
pull PASTA into
the 21st century
Simple pasta just won't cut it
with consumers eager to try
new flavors in pasta-based
entrées and sides. As today's
consumers explore alternative
pasta products, they place a
premium on flavor and better
nutrition.
Pastas made with ConAgra
Mills® Ancient Grain Flours
and Multigrain Blends deliver
the distinctive taste consumers
want plus sought-after health
benefits of whole grains like
high fiber, antioxidants and
protein-all in one package.
ConAgra Mills' line of
Ancient Grain Flours are milled
from amaranth, millet, quinoa,
sorghum and teff-five heirloom grains with millennia
of history, and a promising
future in 21st-century pasta
formulation.
That's why companies like
Philadelphia Macaroni Company
have already begun supplying
whole grain pastas-from rotini
to orzo-made with the goodness
of Ancient Grains.
To request samples of
ConAgra Mills Ancient Grains
in pasta, please contact
agpasta@conagrafoods.com
or ask your current pasta
supplier.

COI1

14 / January 27, 2009

Milling & Baking News

Bimbo credit rating downgraded by
Moody's; vulnerability seen ahead
MEXICO CITY - Moody's Investors
Service has downgraded the senior
unsecured issuer and Mexican national scale ratings of Grupo Bimbo S.A.B.
de C.V. to Baa2 and Aa2.mx. The previous ratings were Baa1 and Aaa.mx,
respectively.
The downgrade was triggered by the
completion of Bimbo's $2.5 billion acquisition of the U.S. fresh bakery business of Weston Foods, Inc. The transaction was financed by debt and raises the
company's debt to EBITDA ratio to 3.5
times from 1.3. Total debt was estimated
at $3.5 billion, up from $1.2 billion.
"The Weston Foods acquisition significantly enhanced Bimbo's business
profile in the U.S. and improves the
company's geographic diversification,
but also weakens its credit metrics because of a material post-transaction
debt load," said Sebastian Hofmeister,
Moody's vice-president.
Estimating the company's financials
on a pro-forma basis, Moody's said the
acquisition raises Bimbo's revenues by
35%. The U.S. share of the company's
revenues climbs with the acquisition
to 40% from 22%, and EBITDA rises to
28% from 5%. Conversely, the Mexico
Bimbo business declines to 50% of sales
from 64% and EBITDA declines to 65%
from 85%. The remainders come from
Latin America operations.
Moody's warned that the difficult
world finance situation leaves Bimbo,
which will need to refinance debt shortly, vulnerable to a further downgrade.
In particular, the company received
$600 million of 1-year bridge financing
that is part of the $2.3 billion financing
package for the acquisition.
"The ratings could be confirmed if
the bridge debt is fully refinanced with
long-dated debt during the next several
months," Moody's said. "By contrast,

without refinancing by mid-2009, a
downgrade could be forthcoming."
The Moody's rating is premised on
the expectation that Bimbo will reduce
debt in the coming years. The agency
said it is looking for a debt to EBITDA
ratio of 2.5 noting that the company's
executives said in a Dec. 10 conference
call that a ratio of 2.0 is a "sound longer term leverage target," one that the
company projected could be reached
in two to three years.
"The acquisition improves Bimbo's
competitive position in the U.S. by
complementing the company's existing operations in the western part of
the country with Weston Foods' significantly more profitable presence on the
East coast," Moody's said. "The transaction creates one of the largest branded
baked-goods businesses in the U.S. "
Moody's predicted the acquisition
would quickly strengthen U.S. margins but with a more modest impact on
overall company margins. Additionally, considerable uncertainty surrounds
that prospect. In the year ended Oct. 4,
Weston's EBITDA margin was 12.5%,
eclipsing Bimbo's consolidated margin of 11.6%. Still, the 12.5% was four
points better than Weston's margin in
the previous four years.
Moody's was upbeat about how
Bimbo would fare in the current weak
economic environment because of
the "defensive nature of the branded
packaged food sector and an increase
in the number of meals at home."
A continuing positive for Bimbo is
the company's top, high-margin position in the Mexican market.
"The company benefits from an
extensive proprietary distribution
system that represents an important
barrier to entry against international
competitors," Moody's said. MBN

Forbes tabs Flowers Foods as 'best managed' food company
THOMASVILLE, GA. - For the
second time in three years, Flowers
Foods, Inc. has been named the "best
managed" food company among the
400 best large companies in the United
States, according to Forbes magazine.
The Thomasville-based company,
which also received the top honor in
January 2007, now has appeared on the
list five times. In the most recent ranking, Flowers was selected by Forbes editors as No. 1 among the 17 companies
in the food, drink and tobacco category.

The companies are chosen based not
only on financial performance, but on
leadership, innovation and execution.
"We're honored to once again be
selected as 'best of the best' among
our peers by Forbes," said George E.
Deese, chairman of the board, chief
executive officer and president of
Flowers Foods. "The entire organization takes pride in our ongoing dedication to executing on our long-term
strategy that continues to build value
for our shareholders." MBN
bakingbusiness.com / world-grain.com

http://www.Aa2.mx http://www.Aaa.mx http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - January 27, 2009

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