Mexico Baker Sliced After M&A Sealed

Mexican baker Bimbo has closed its purchase of Weston Foods’ US unit for a total of $2.5bn, it said Thursday. The announcement prompted Moody’s to confirm its downgrading of the credit to Baa2 from Baa1 and its local rating to Aa2.mx from Aaa.mx. “The Weston Foods acquisition significantly enhances Bimbo’s business profile in the US and improves the company’s geographic diversification, but also weakens its credit metrics because of a material post-transaction debt load,” says Moody’s analyst Sebastian Hofmeister. The ratings remain on review for further downgrade. Moody’s had been planning a downgrade, noting that the jumbo deal was almost entirely financed with debt. Bimbo took out a $2.3bn M&A loan, of which $600m matures in December 2009. Lead banks BofA, BBVA, Citi, ING, HSBC and Santander are looking to syndicate the deal to MLAs and retail. Bimbo is heard seeking to sell tickets of $212.5m that pay up front fees of 150bp on a 3-year and 175bp for 5-year portions. The margin on the 3-year facility is Libor or TIIE plus 250bp, while the 5-year offers 300bp. Participants may lend in either MXP or USD.