So dire are the markets that Anheuser-Busch InBev has priced its €6.36bn rights issue at a whopping 69 per cent discount to Friday’s closing price – already one-third below the level when it postponed the issue last month. But the clock was ticking for InBev to start paying down the €54.8bn financing for its mega-acquisition of the Budweiser brewer. It has probably now done enough to get the issue away. Since the initial postponement, InBev has completed the deal, and Brazilian and Belgian shareholders, controlling 60-odd per cent of the group, are stumping up €2.8bn of funds to exercise their rights, not the €1.2bn they indicated previously. Belgian shareholders are also placing €1.2bn of ex-rights shares in an accelerated book build, whose proceeds they will use to exercise more of their total €4bn rights – largely removing any stock “overhang”.

Paying back its $9.8bn equity bridge financing through the rights issue, however, gets A-B InBev only to base camp in scaling its debt mountain. It must still repay a $7bn bridge loan within 12 months through divestments. Carlos Brito, chief executive, is confident this can be done by selling “two or three assets”. Shareholders might prefer him to sell a single asset big enough to cover the whole amount – say, InBev’s Russian business, a chunky operation, but only 4 per cent of the merged group.

Provided A-B InBev can clear these two hurdles, the merged group’s prodigious free cashflow should start making inroads into the $12bn loan it must refinance within two years. As investors gain confidence the debt can be tamed, they might also realise how cheap A-B InBev now is. At a theoretical ex-rights price of €12 a share, Collins Stewart puts it on 7 times 2009 earnings, a 25 per cent-plus discount to European peers. The solidity of A-B InBev’s US business and scope for merger savings ought to see the shares moving to a medium-term premium.

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