Thai Beverage PLC’s  (SGX: Y92) credit rating was cut to junk by Standard & Poor, which cited concern about the debt and cash flow of the group controlled by billionaire Charoen Sirivadhanabhakdi after the purchase of Fraser & Neave Ltd. (SGX: F99).

The company was cut to BB+, one level below investment grade, from BBB-, S&P said in a statement. After the downgrade, S&P withdrew all ratings at the company’s request, it said.

Charoen, whose businesses range from milk to shopping malls through his companies, including Thai Beverage and TCC Assets, bought F&N earlier this year for S$13.8 billion (US$11 billion).

“We view the group as highly leveraged,” S&P said in the statement, referring to Thai Beverage, TCC Assets and F&N.

“We evaluate the group’s consolidated cash flow adequacy as substantially weaker and its consolidated debt as considerably higher than that of either Thai Bev or F&N on a stand-alone basis.”

Thai Beverage dropped 3.1% to 47.5 Singapore cents at the close of trade before the S&P announcement, the lowest since Sept 4.

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