Fitch lowers United Biscuits notes to CCC+

Fitch Ratings said it downgraded United Biscuits Finance's senior subordinated notes to CCC+ from B- while also lowering subsidiary Regentrealm Limited's senior unsecured rating to B- from B and its senior secured debt to BB- from BB.

The outlook has been changed to negative from stable.

Fitch said the actions follow the publication of very disappointing results for FY04, with a 13.9% decrease in underlying EBITDA if the contribution of Jacob's and Triunfo is deducted. This trend was not reversed in Q105.

Of particular concern is the limited cash flow generation, primarily driven by decreasing like-for-like profit generation from the core UK operations, the agency added.

In Fitch's view, UB's decision to expand operations in the hyper-competitive UK market by acquiring Jacob's may not deliver increased combined profit, as savings from cost synergies are likely to be offset by continuing pricing pressure from UK retailers, the agency said.

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