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S&P: Molson Coors Credit Ratings Off Credit Watch

The Associated Press

NEW YORK (AP) — Standard & Poor's Ratings Services on Friday removed the "CreditWatch negative" status from all credit ratings for Molson Coors Brewing Co.

The ratings agency did, however, lower the brewing company's corporate credit rating, to "BBB-" from "BBB."

The short-term corporate credit rating was affirmed as "A-3." It was not on CreditWatch.

The company's ratings had been placed on CreditWatch with negative implications in February following continued weaker-than-expected credit measures. The outlook is "Stable."

The ratings reflect the company's position as a global brewer, S&P ratings analysts said in a statement. Molson Coors' business profile benefits from some geographic diversity, good brand recognition, and historically good cash flow generation, the analysts said. However, its high debt leverage, challenging industry conditions in the mature and low-growth markets in which it competes, and integration risks at the company's U.S. joint venture, MillerCoors LLC, temper company strengths.

Total debt at Molson Coors was about $1.6 billion as of March 29, 2009.

The stable outlook reflects the analysts belief that Molson Coors' leverage will likely remain close to or slightly above current levels in the near term. They cite challenging industry conditions but acknowledge some benefits from the company's ongoing restructuring efforts.

The ratings service said it could revise the outlook to negative if the company pursues a more aggressive financial policy or debt grows, said Standard & Poor's credit analyst Jean C. Stout.

"We estimate that credit measures could weaken if the cash needs at the joint venture are greater than our current expectations and operating performance at either Molson Coors or the joint venture does not continue to improve as expected," she continued.

Although unlikely in the near term, the outlook could be revised to positive, if Molson Coors can improve its operating performance and credit measures.

Shares of Molson Coors rose 40 cents to $41.96.