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May 31, 2002

CHILE: Compania Cervecerias Unidas rating held after alcohol tax hike, says S&P

International ratings service Standard & Poor's (S&P) said that Chilean supmermarket giant Compania Cervecerias Unidas's (CCU) credit rating and outlook are not affected by the Chilean government's announcement that excise taxes on alcoholic beverages would be raised.

International ratings service Standard & Poor’s (S&P) said that Chilean supmermarket giant Compania Cervecerias Unidas’s (CCU) credit rating and outlook are not affected by the Chilean government’s announcement that excise taxes on alcoholic beverages would be raised.

After 30 years of a stable tax structure in excise taxes for alcoholic beverages, the Chilean government announced a proposal to raise these taxes to 20% from 15% for beer and wine, with proceeds to be used to finance new social expenditure programmes.

If approved, this tax increase is not expected to become effective until late 2002, but the passing of this proposal could exert some downward pressures on the demand for most of

CCU’s products (beer and wine) or on CCU’s margins if the company decides not to transfer the effect to consumers.

Nevertheless, S&P believes the company’s sound financial profile and strong margins would bode well despite the effects of either of the two mentioned alternatives, and held its BBB+/Stable rating.

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