Fitch Affirms Andina's Ratings; Places Kopolar on Rating Watch Positive

Fitch Ratings has affirmed the ratings of Embotelladora Andina S.A. and placed Embotelladoras Coca-Cola Polar S.A (Kopolar) on Rating Watch Positive following the merge announcement. A complete list of ratings is provided at the end of this release.

The Transaction

On Feb. 2, 2012, Andina and Kopolar's controlling shareholders (Inversiones Freire Ltda. and Inversiones Los Aromos Ltda., respectively) closed a merger by incorporation agreement, Andina being the acquiring company. As a result, Kopolar's current shareholders will obtain a 19.68% participation stake in Andina after closing.

The merger agreement was approved by the Boards of both companies, but is subject to approvals of The Coca Cola Company, companies' shareholders and regulators in each of the countries where they operate.

Neutral Impact to Andina's Credit Quality

Considering Andina's solid credit profile and its relatively larger size compared with Kopolar, Fitch believes that Kopolar's higher debt levels would have a neutral impact in the financial position of the merged company. On a pro forma basis, after this merger which would not involve debt increases, the debt/EBITDA ratio would reach 0.7 times (x) compared with the current 0.5x of Andina as of Dec. 31, 2011. Net debt/EBITDA would reach 0.4x from the current 0.2x.

Fitch believes that the merger with Kopolar will improve Andina's business position and geographic diversification, extending its coverage in Chile, Argentina and incorporating Paraguay. The merged company would maintain the leading positions that each of the companies currently have in their markets. Fitch estimates that synergies coming from saving costs and improving efficiencies in Chile and Argentina, where both companies operate, would strengthen the margin of the combined company. The new company would have presence in Chile, Brazil, Argentina and Paraguay reaching on a pro forma basis, sales of 641 million unit cases, revenues of CLP1,250 billion and EBITDA of CLP220 billion. EBITDA breakdown by country would reach approximately 39%, 36%, 16%, 10%, respectively.

Andina has a leading position in its franchised territories and it is the largest Coca Cola bottler in Chile. During 2011, it sold 501 million unit cases, reaching revenues of CLP982 billion and EBITDA of CLP181 billion. Brazil was the main market with 44% of consolidated EBITDA, followed by Chile with 39% and Argentina with 18%. Andina has historically maintained a solid financial profile. As of December 2011, total debt reached CLP86 billion and total cash and equivalents reached CLP46 billion, resulting in a debt/EBITDA ratio of 0.5x and net debt/EBITDA of 0.2x.

Kopolar is the third largest Coca Cola bottler in Chile and the only in Paraguay. During latest 12 months (LTM) ended in September 2011, Kopolar sold 140 million unit cases, reaching sales of CLP268 billion and EBITDA of CLP40 billion. In terms of EBITDA, Paraguay represented its main operation, accounting for 55% participation, followed by Chile (39%) and Argentina (6%). Kopolar maintains an adequate financial position having increased its financial indebtedness over the last couple of years, to finance its investment plan in Argentina to improve profitability in that country. As of September 2011, Kopolar holds CLP78 billion in debt and CLP22 billion in cash balance resulting in a debt/EBITDA and net debt/EBITDA ratios of 1.9x and 1.4x, respectively.

Fitch has affirmed Andina's ratings as follows:

--Local and foreign currency Issuer Default Ratings (IDR) at 'A';

--Senior unsecured Yankee bond debt due in 2027 at 'A';

--National scale rating at 'AA+(cl)';

--Senior unsecured UF-denominated bond No 254 at 'AA+(cl)';

--National equity rating at 'Primera Clase Nivel 2 (cl)'.

The Rating Outlook is Stable

Fitch has placed the following ratings for Kopolar on Rating Watch Positive:

--National scale rating, 'AA-(cl)';

--Bond line No 640 and bonds A and B issued under the program, 'AA-(cl)';

--Bond line No 641 and bonds C issued under the program, 'AA-(cl)'.

Kopolar's national equity rating is maintained at 'Primera Clase Nivel 4 (cl)'.

Additional information is available at 'www.fitchratings.com' and 'www.fitchratings.cl'. 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. 12, 2011).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229

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