Bloomberg News

Anheuser-Busch InBev to Cut Costs Refinancing $13 Billion

June 07, 2011

(Updates with interest margins in third paragraph.)

June 7 (Bloomberg) -- Anheuser-Busch InBev NV plans to amend the terms of an $13 billion loan signed last year, reducing the size of the financing and its borrowing cost, two people familiar with the matter said.

The world’s largest brewer will consolidate the three- and five-year loans into one single revolving credit facility for $8 billion, the people said. It’s also seeking to cut interest rates demanded by lenders last year, the people said.

Marianne Amssoms, a spokeswoman for Leuven, Belgium-based company, declined to comment.

Last year AB InBev refinanced acquisition debt from its 2008 merger. The new loans paid initial interest of 117.5 basis points more than the London interbank offered rate for a three- year $5 billion term portion and an interest margin of 97.5 basis points for a five-year $8 billion revolving credit, according to data compiled by Bloomberg.

Banks have reduced the average interest they charge for loans to similarly rated companies in Europe to 37.5 basis points this year from 80 basis points more than benchmark lending rates in 2010, Bloomberg data show.

InBev’s first-quarter net income more than doubled from a year earlier to $964 million, helped by lower interest charges. Standard & Poor’s Ratings Services raised the brewer’s long-term rating to A- in April, citing debt reduction.

AB InBev, which was created when InBev NV took over St. Louis-based Anheuser-Busch Cos. in 2008 for $52.5 billion, said it cut $75 million of costs in the quarter. The company has a three-year target of achieving $2.25 billion in annual cost savings by the end of 2011, with $270 million of that coming from measures including closing factories this year.

A basis point is 0.01 percentage point.

--Editors: Cecile Gutscher, Chapin Wright

To contact the reporter on this story: Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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