pacific brands financing risk remains -macq

DJ MARKET TALK: Pacific Brands Financing Risk Remains -Macq

2324 GMT [Dow Jones] Macquarie says Pacific Brand's (PBG.AU) balance sheet remains
an area of concern, despite move to reduce its dividend. "Dividend cut should keep
covenants intact," analyst says. "However, we note that if PBG suffers a 6% or
greater decline in EBITDA than we are forecasting, it risks breaching the (more
restrictive) interest coverage covenant." Maintains Underperform; price target 47
Australian cents. "With the uncertainty over PBG's earnings line as well as
debt refinancing risk we do not believe that investors need to be exposed to this
stock," analyst says. Last trade 57 cents, up 3.6%. (SVM)

DJ MARKET TALK: Merrill Cuts Pacific Brands Price Objective

2134 GMT [Dow Jones] STOCK CALL: Merrill Lynch cuts its price objective on Pacific
Brands (PBG.AU) to 45 cents from A$1.30 after company said it will slash its dividend to
help pay down debt. "With around A$750 million of net debt and with the company
likely to be in breach of debt covenants (on our forecast earnings) in FY10, PacBrands is
being prudent in stabilizing its balance sheet," analyst says. "That said, the
question of whether the cut in dividend and the underwritten dividend reinvestment plan
will be enough is highly relevant." Adds much depends on how large the looming
downturn in economic conditions and fall in AUD will be. Maintains at Underperform; last
trade 55 cents. (SVM)