S&P rates Intrawest notes B+

Standard & Poor's assigned a B+ rating to Intrawest Corp.'s $350 million 7.50% unsecured senior notes due Oct. 15, 2013 and confirmed its existing ratings including its corporate credit at BB-. The outlook is positive.

Intrawest's ratings reflect the cyclical and seasonal resort business, an aggressive financial policy and continued uncertainty in travel patterns, S&P said. These weaknesses are offset by Intrawest's leading position and successful track record in owning, operating and developing village-centered destination resorts across North America; the maturing of the portfolio of resorts into a less capital-intensive stage; and the company's disciplined resort real estate development strategy.

Intrawest's business strategy is sound, with a portfolio of well-positioned resorts and resort accommodation developments that are supported by a strong sales and marketing team, S&P commented.

The company has reduced weather-related risk by diversifying its operations among various geographic markets, offering a variety of leisure activities in a resort village atmosphere. Skier visits are supported by each resort's inventory of "warm beds" and locations that are in close proximity to major population centers.

Having completed the majority of the significant capital expenditures required to develop its resort portfolio, Intrawest is now able to focus increasingly on its sales and marketing system to further develop its reputation as a premier resort operator, S&P added.

The effect of the new issue on Intrawest's coverage measures is slightly positive, given the roughly 225 basis point differential in interest costs. S&P said pro forma interest coverage is expected to improve slightly to 1.84x from 1.77x. Total debt to EBITDA is expected to rise marginally to 6.0x from 5.9x as approximately $17.4 million of additional debt is added.

Moody's rates Bavaria notes Ba3

Moody's Investors Service assigned a Ba3 rating to Bavaria SA's proposed seven-year senior unsecured bonds. The outlook is stable.

Moody's said the rating is based on Bavaria's solid market leadership positions in all of its countries of operation: Colombia (98% share), Peru (99% share), Ecuador (95% share), and Panama (80% share). These dominant positions translate into price leadership and result in generally strong and stable cash flows.

The geographic diversity serves to temper the political and operational risk that is endemic to some of the company's markets.

The Colombia-based company, now the second largest brewer in Latin America, has grown through acquisitions over the past several years and has reduced its reliance on cash flows from its home market from 85% to closer to 50%. However Bavaria has incurred a significant amount of debt while pursuing its growth strategy, much of which is relatively short-tenored.

Total debt to EBITDA was about three times in 2002 or 3.5 times when adjusted for guarantees, Moody's said. Debt represented more than 100% of 2002 pro-forma revenues.

A key goal of the proposed financing is to lengthen the firm's debt maturity profile.

S&P rates Bavaria notes BB

Standard & Poor's assigned a BB rating to Bavaria SA's planned $400 million senior unsecured notes due 2010. The outlook is stable.

S&P said Bavaria's ratings reflect its leadership in the beer industries of Colombia, Peru, Ecuador and Panama; the attractive demographics of those countries; the company's well established brands; and its significant cash flow generation.

Nevertheless, Bavaria is still affected by vulnerabilities particular to the countries of operation, such as the volatility of their currencies, strong correlation between the company's sales and the economic performance of these countries; and potential local tax changes, all under a relatively high debt leverage resulting from recent acquisitions, S&P added.

The stable outlook reflects S&P's expectation that Bavaria's significant cash flows will continue, along with the ongoing efforts to improve efficiencies and reduce leverage.

Fitch rates Bavaria BB

Fitch Ratings assigned a BB foreign-currency rating to Bavaria SA's planned $400 million senior notes due 2010. The outlook is negative.

Fitch said the rating for the notes is supported by the company's leading position in the beer industry of Colombia, Peru, Ecuador and Panama. During 2002, Bavaria had estimated market shares in each of these countries of 98.3%, 99.0%, 94.5% and 80.4%, respectively. These leading positions reflect the high barriers to entry in the Latin American beer market.

In addition to cultural reasons, international brewers have shied away from entering the company's markets because of the strong - and almost nationalistic - brand equity of the company's flagship brands, such as Aguila and Cristal. Furthermore, entering a market such as Colombia or Peru would be costly due to the dearth of supermarkets and the prevalence of on-premise consumption of beer in most of Bavaria's key markets, Fitch said. On-premise consumption makes an elaborate distribution system essential, which is difficult and expensive to duplicate. Imports are not a factor in the company's markets due to the low price paid for beer in the region, which is primarily a result of the almost exclusive use of the returnable glass bottle in the region.

Bavaria operates in several non-investment grade countries. As a result, political and economic risk in the countries in which the company operates is high. Low-rated sovereigns, at times, can have rapid changes in political leadership and economic policies. Bavaria is vulnerable to higher taxes on beer, as the largest taxpayer in the aforementioned countries, Fitch said.

Fitch expects Bavaria to generate approximately $610 million of operating income plus depreciation and amortization (EBITDA) during 2004. With capital expenditures expected to be approximately $100 million, taxes projected to be $150 million, interest expense estimated to be about $170 million and changes in working capital likely to be around $30 million, Bavaria should generate approximately $160 million of free cash flow. With dividends anticipated to be about $60 million, the company should have about $100 million that it can use to reduce its debt to less than $1.8 billion by the end of 2004. These figures translate into a total debt-to-EBITDA ratio of 3.0 times and an EBITDA-to-interest expense coverage of 3.6x, which are both consistent with the rating category.

Fitch upgrades Dogus

Fitch Ratings upgraded Dogus Holding AS' long-term foreign and local currency ratings to B from B-. The outlook remains positive.

Fitch said the action follows its actions to both Turkey and Turkish banks.

As of year-end 2002, about 67% of Dogus' revenues were accounted for by its financial business, of which Turkiye Garanti Bankasi is the main driver, Fitch said. On Wednesday, Fitch upgraded Turkiye Garanti Bankasi's long-term foreign currency and local currency ratings to B from B- with a positive outlook.

The group has made efforts to diversify its revenue base and is aiming to further strengthen its non-financial businesses, mainly in food retail, automotive and construction in the next two to three years, Fitch noted. The restructuring exercise of its food retail business activities has almost been completed, creating potential for positive returns in the future. Increased profit and revenue contributions are expected from the group's automotive and construction businesses in fiscal 2003.

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