Fitch ups United Biscuits notes to B-

Fitch Ratings said it has upgraded United Biscuits Finance's senior subordinated notes to B- from CCC+ and the recovery rating to RR4 from RR5.

At the same time, the agency said it has affirmed Regentrealm Ltd. - a subsidiary of United Biscuits - at issuer default B-, short-term B and its senior secured debt at BB-/RR1.

The outlook has been changed to stable from negative, which reflects United Biscuit's diminished refinancing risk, the agency said.

The company has been able to improve cash flow generation by moving toward healthier products, which allows for premium pricing, while realizing part of the expected cost savings from the integration of past acquisitions, the agency said.

Improved financial performance and senior debt prepayment have enabled Fitch to upgrade its rating on the senior subordinated notes, reflecting average recovery prospects upon default. The recovery assumptions for the company as a going concern business reflects its leading positions in branded biscuits and snacks across a number of European markets and the possibility of disposing of the regional operations separately in pursuing better recoveries.

However, Fitch said, the company remains exposed to overall low organic sales growth prospects, the pressure from retailers in the core U.K. operations and growing threats from discounted and private labels in Northern Europe.

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