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Capital Markets

Coca-Cola HBC gears up to cut capital cost

Most corporates are trying hard to improve credit ratings. But Coca-Cola's second biggest bottler, frustrated with its rating by Moody's after improving its ratios, is bucking the trend by increasing its debt regardless. Kathryn Tully reports.

IT WAS THE mission of chief financial officers at companies around the world in 2003 to reduce the proportion of debt to equity and bolster credit ratings. So it's a shock to hear of a corporate that got so fed up with not having a credit rating upgrade in recognition of its conservative financial management that it decided it might as well increase its debt load and be done with it.

This was the conclusion that the finance team at Coca-Cola Hellenic Bottling Company (Coca-Cola HBC) came to last year.

The company was formed in 2000 by the merger of two bottlers – Coca-Cola Beverages and Hellenic Bottling Company – and became Coca-Cola's second biggest bottler by revenues, with operations in 26 countries, from the Republic of Ireland to Russia and Nigeria, servicing 500 million consumers. Moody's had rated it A3 with a positive outlook since May 2001 and Standard & Poor's rated it one notch higher at A.

Moody's raises the bar In 2001 Moody's told the company it would consider an upgrade if it continued to improve its retained capital to net debt, its net debt to total capital and ebitda to interest coverage.

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