KOF Readies Acquisition Debt Takeout

Coca-Cola Femsa (KOF) is readying fixed-income investor meetings ahead of what would be an international bond sale replacing acquisition debt. The A/A2/A minus Mexican bottler will meet accounts in Boston, Los Angeles, San Francisco, New York and Chicago November 5-7. Escorted by Citi, Goldman Sachs, JPMorgan, HSBC and Mitsubishi-UFJ, KOF may follow with a deal if market conditions permit. The largest franchise bottler of Coca-Cola products closed this week the 100% all-cash acquisition of Brazil’s Industria Brasileira de Bebidas (Spaipa), at an enterprise value of $1.86bn, and was readying a $1.5bn 5-year loan led by Bank of Tokyo Mitsubishi, Mizuho and HSBC in September. Spaipa was the second of two purchases, following a $448m purchase of Brazilian Companhia Fluminense de Refrigerantes closed in August. Fitch estimates that KOF’s total debt-to-Ebitda and net debt-to-Ebitda will increase on a pro-forma basis to approximately 2.0x and 1.6x, respectively, by the year-end. In June, CFO Hector Trevino told LatinFinance that KOF would look tap the bond markets before US rates go up. The company has $300m of bank debt maturing this year. Its last bond was a $603m-equivalent domestic 10-year in May.