Fitch Downgrades Heinz to 'BB+' on Buyout Announcement; Places Ratings on Negative Watch

  Fitch Downgrades Heinz to 'BB+' on Buyout Announcement; Places Ratings on
  Negative Watch

Business Wire

CHICAGO -- February 15, 2013

Fitch Ratings has downgraded the ratings of H.J. Heinz (Heinz: NYSE: HNZ) and
its subsidiaries following the firm's announcement that it had entered into a
definitive agreement to be acquired by a consortium comprised of Berkshire
Hathaway and 3G Capital. Fitch also placed Heinz's ratings on Watch Negative.
Additional downgrades could occur upon review of final financing terms and the
firm's capital structure once the deal is consummated. The downgrades are as
follows:

H.J. Heinz Co.

--Long-term Issuer Default Rating (IDR) to 'BB+' from 'BBB+';

--Bank facilities to 'BB+' from 'BBB+';

--Senior unsecured debt to 'BB+' from 'BBB+';

--Short-term IDR to 'B' from 'F2';

--Commercial paper (CP) to 'B' from 'F2'.

H.J. Heinz Finance Co. (HFC)

--Long-term IDR to 'BB+' from 'BBB+';

--Bank facilities to 'BB+' from 'BBB+';

--Senior unsecured debt to 'BB+' from 'BBB+';

--Series B Preferred Stock to 'BB-' from 'BBB-';

--Short-term IDR to 'B' from 'F2';

--CP to 'B' from 'F2'.

H.J. Heinz Finance UK Plc.

--Long-term IDR to 'BB+' from 'BBB+';

--Senior unsecured debt to 'BB+' from 'BBB+'.

The going private transaction is valued at $28 billion, including the
assumption of $5.3 billion of debt including hedge accounting adjustments at
Oct. 28, 2012. The offer represents a 20% premium to Heinz's closing share
price on Feb. 13, 2013, a 30% premium to the firm's one-year average share
price, and translates to more than 13x Heinz's approximate $2.1 billion of
EBITDA for the LTM period ended Oct. 28, 2012. The buyout was unanimously
approved by Heinz's board of directors and is expected to close in the third
calendar quarter of 2013, subject to shareholder and regulatory approval.

KEY RATING DRIVERS:

Fitch estimates that Heinz's leverage could increase to 5.0x or more from 2.5x
at Oct. 28, 2012, assuming an equity contribution in the 60% range and
post-LBO debt of $10 billion or more. Despite the company's strong business
profile and solid FCF generation, Fitch's views this substantially higher
level of financial risk as not being commensurate with an investment grade
rating. Moreover, Fitch is concerned that new debt issued to finance the
transaction may have better terms than those of Heinz's existing public notes.
Fitch also notes that several of Heinz's public debt issuances prior to 2008
do not have a change of control put feature, potentially placing these
noteholders at a disadvantage.

RATING SENSITIVITIES:

Future developments that may, individually or collectively, lead to a positive
rating action or Outlook revision include:

An upgrade of Heinz's ratings is not anticipated in the near term. Commitment
to deleveraging could be a consideration but might not materially change
credit protection measures in the near term given the large amount of debt.
Potential asset sales in combination with directing much of the firm's free
cash flow towards debt reduction might support upward migration in the ratings
over time.

Future developments that may, individually or collectively, lead to a negative
rating action include:

Further downgrades could occur upon closing of the transaction based on the
ultimate capital structure and the cushion in credit protection measures in
the medium term. Management's financial posture given this transaction would
indicate a comfort with high leverage over the medium term that could weigh on
the rating.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

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Contact:

Fitch Ratings
Primary Analyst
Judi M. Rossetti, CPA/CFA, +1-312-368-2077
Senior Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analysts
Grace Barnett, +1-212-908-0718
Director
or
Carla Norfleet Taylor, CFA, +1-312-368-3195
Director
or
Committee Chairperson
Mark Oline, +1-312-368-2073
Managing Director
or
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Brian Bertsch, +1-212-908-0549
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