The national scale long-term rating of BBB+(NG) and the short-term issuer rating of A2(NG) assigned to Champion Breweries Plc have been affirmed by GCR Ratings.
The rating agency, in a statement, also disclosed that the brewery firm’s outlook on the ratings has been upgraded to stable from rating watch evolving.
The outlook was revised by GCR after the successful acquisition of the Bullet brand by Champion Breweries, while sustaining leverage metrics within those consistent with the current rating level despite the spike in debt.
The outlook reflects the expectation that Champion Breweries’ expanded business profile would support strong earnings growth and cash generation, which could offset the emerging strain on gearing and liquidity.
It was also noted that the affirmed ratings of Champion Breweries were underpinned by strong earnings quality and expected product and geographical diversification following the recent acquisition. These strengths are partly offset by the ramp-up of debt for working capital and partial funding of the acquisition, though gearing metrics remain modest.
Last month, Champion Breweries completed the acquisition of the Bullet brand from UK-incorporated Sun Mark International Limited through a special purpose vehicle (SPV), namely EnjoyBerv (Netherlands).
Under the shareholding agreement, Champion Breweries owns 80 per cent while Sun Mark retains a minority interest in the SPV.
The company’s product portfolio is, therefore, expanded from two limited-reach brands previously to a more diversified base with multiple offerings.
The Bullet brand’s multi-market presence across West and Central African markets, combined with its sizeable share of the regional ready-to-drink energy segment, further strengthens the assessment of the company’s competitive position.
However, the realisation of the expected synergy from the acquisition is dependent on the effective management of execution and integration risks, including supply chain management and the company’s ability to consolidate access to Bullet’s dominant markets.