Fitch affirms MEPC ratings

Fitch Ratings said it affirmed U.K. property company MEPC Ltd.'s senior unsecured and short-term ratings at BB and B, respectively. The outlook remains negative as Fitch said it is concerned that further funds could be upstreamed from MEPC to its shell holding company, Leconport Estates Ltd. (now wholly-owned by Hermes) through a further inter-company £200 million facility.

Fitch said using this route to place disposal proceeds with Leconport further reduces MEPC's own financial flexibility and would be of utmost concern for bondholders given the immediacy of near-term debt maturities.

MEPC's refinance risk over 2004 and 2006 is particularly acute given committed bank debt expiries (facilities of £345 million, £230 million drawn at September 2003) and the near-dated bonds (2004: £46 million; 2006: £153 million). Mitigating this risk, Fitch said it takes comfort from a new £350 million facility that matures September 2007.

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