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S&P rates Wesfarmers bonds BBB+
Standard & Poor's said it assigned a BBB+ rating to Wesfarmers Ltd.'s US$650 million bonds due 2013.
Proceeds will be used to refinance part of the A$4 billion bridge facility used by Wesfarmers to buy Coles Group Ltd. in November.
The agency said the new bonds represent a critical step in refinancing the company's A$4 billion bridge acquisition facility and that Wesfarmers' strong cash flow generation across its diverse business base, the 100% underwriting of its interim fiscal 2008 dividend and favorable banking relationships should help the company successfully complete the refinancing task.
Wesfarmers has a strong record in integrating acquisitions, S&P said, but the company faces substantial integration and performance risks and expects to take three to five years to achieve anticipated benefits and satisfactory returns, given the scale of the Coles transaction and the poor performance of several Coles divisions before being acquired by Wesfarmers.
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