MEXICO: Coca-Cola Femsa seeks $550m debt reduction
The company, which is the world's second largest bottler of Coke products, took on the debt to finance the recent takeover of Miami-based Panamco. Debt currently stands at US$2.7 billion.
Carlos Salazar, the chief executive officer of KOF, has said KOF will use US$200m in cash to pay down the debt and would also try to raise an extra $220m by issuing new shares, pending approval from the US Securities and Exchange Commission.
"This, plus the cash flow generation, will leave us in a (debt) position close to US$2.1-US$2.15 billion at the end of the first year of operation," he said.
The merger with Panamco - completed earlier this week - will make Coca-Cola Femsa, which is 30% owned by Coca-Cola Co. and 51%-owned by the Mexican brewer, Femsa, the largest soft drink bottler in Latin America with annual revenues of US$4.6 billion. The company will also be the world's second largest bottler of Coke brands.
However, some analysts had expressed concern over the debt levels the merged company will face. Coca-Cola Femsa said it is partly financing the acquisition by issuing about US$960m in bonds, in Mexican pesos, with some US$408m of this total issued in April.
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