S&P keeps Wrigley on watch

Standard & Poor's said its ratings on Wm. Wrigley Jr. Co., including its A+ corporate credit rating and A-1 commercial paper rating, remain on CreditWatch with negative implications, where they were originally placed on April 28 following the announcement that Mars Inc. would merge with Wrigley in a partially debt-financed transaction.

Funding for the transaction includes about $11.6 billion from Mars, a $5.7 billion committed senior debt facility from Goldman Sachs & Co. and $4.4 billion of subordinated debt from Berkshire Hathaway.

The agency expects to lower the corporate credit and senior unsecured notes ratings to BB+ from A+. S&P said this anticipated downgrade reflects the company's more aggressive financial policy and significantly weaker credit measures, given the substantial increase in debt associated with this transaction. Pro forma leverage, as estimated by the agency, would be about 7 times as of March 31.

The current ratings reflect Wrigley's strong business profile based on its worldwide leadership in the chewing gum confectionery sector, relatively high operating margins and stable cash flow, S&P said.

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