Following Standard & Poor’s removal of the BB+ rating from German baker Kamps after its acquisition by unrated Italian pasta group Barilla, the group is now rumoured to be approaching Moody’s about a rating for Kamps.
Moody’s declined to comment but a spokesperson for Barilla said: “What we are seeing is that all necessary steps are being taken to ensure bondholders can rely on adequate information and support. We do not intend to make any official statement regarding negotiations with Moody’s.”
However the spokesperson added mysteriously: “From the first statement you can infer certain things.” And in a joint response to the ratings removal, Barilla and Kamps said in a press release: “Barilla has informed S&P that it is ready to supply S&P with all the necessary information regarding its financial position and its strategy, particularly with regards to the acquisition of Kamps. For the time being, however, Barilla does not intend to apply for a rating of its own debt.”
Although S&P did not want to comment directly on Barilla’s press release, the rating agency’s analyst for Kamps, Hugues De La Presle, says: “If we had access to all the information on Kamps we would not have withdrawn the rating. We couldn’t go on rating Kamps as a standalone company because we view it fundamentally as a division of Barilla.”
And though Barilla says it was prepared to let S&P see the figures, S&P says it did not have full access to Barilla management, who the agency considers the real driver of strategy at Kamps. S&P also feels that it gave the management adequate time to respond to its concerns. “It has been on outlook since April,” Presle adds.
Investors have also been unimpressed with Barilla’s provision of information. Kamps bonds included a covenant allowing bondholders to sell them back to the company in the case of a change of control. The covenants specify: “Notice will be published in a leading newspaper having a general circulation in London and New York.” But Kamps’ investor relations department admits the advert appeared only in UK daily The Times. And a London-based investor says: “Management has been obstructive and second-quarter results lacked transparency.”
However, a new chief financial officer was installed at Kamps in early July who, according to investors, seems to be improving the situation.
The rating removal will affect roughly €600 million of high-yield bonds outstanding and a further €200 million in debts to banks.
The week on Risk.net, July 7-13, 2018Receive this by email