MIRA INFORM REPORT

Report Date :

17.10.2011

IDENTIFICATION DETAILS

Name :	SPRINGS GLOBAL US, INC.
Registered Office :	2711 Centerville Road Suite 400, Wilmington, Delaware, 19808
Country :	United States
Financials (as on) :	31.12.2010
Date of Incorporation :	28.10.2005
Com. Reg. No.:	4052784
Legal Form :	Corporation for Profit
Line of Business :	Textile Home Furnishings Supplier

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30^th, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
United States	a1	a1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Bottom of Form

GEOPOLITICS - UNITED STATES

POLITICAL DATA	ECONOMIC DATA
Form of Government: Federal Economic Risk: Nil	Currency: USD Branch Situation: Competitive

IDENTIFICATION

Legal Name:	SPRINGS GLOBAL US, INC.
Legal Address	2711 CENTERVILLE ROAD SUITE 400, WILMINGTON, DELAWARE, 19808, USA
Operative Address	205 N White Street, Fort Mill, South Carolina 29715
Telephone:	+1 803-547-1500	Registration Number :	4052784
Fax:	+ 1803-547-1636	Legal Form:	Corporation for Profit
Email:	info@springs.com/	Registered in:	Delaware
Website:	http://springs.com/	Date Created:	2005
Manager:	Josué Christiano Gomes da Silva	Date Incorporated:	October 28, 2005
Staff:	6000	Stock:	NA
		Value:	NA
Activity:	Textile home furnishings supplier

BANKS

Name of the Bank

WACHOVIA BANK

BUSINESS

HISTORY
	The company was born of the merger of the textile home furnishings businesses of Springs Industries of the United States and Coteminas of Brazil in January 2006.
PRINCIPAL ACTIVITY
	The company is a vertically integrated textile home furnishings supplier.
Products/Services description:
	The company offers bedding and bath products: Towels Dishcloths Sheets Blankets Decorative pillows Bed Skirts among others.
Sales are:
	Wholesale, Retail
Brands:
	•Wamsutta •Springmaid •Pure Brazil Cotton •Court of Versailles •Artex •Santista •Fantasia •Arco Iris
Clients:
	Final consumers. Its home furnishings are sold through catalogs, department stores, and mass merchandisers (such as Wal-Mart and Target).
Operations area:
	National, International
The company imports from Asia (HONG KONG, India)
The company export to Canada, and Mexico.
Trade References:
	The person contacted refused to provide the names of their suppliers for us to check the trade references.
Competitors:
	Polymer Group, Inc American Woolen Company, Inc True Textiles, Inc
The subject employs 6000 employee(s)
PAYMENTS
	made on a 45 days basis - monitored over the last 12 months
LOCATION
Headquarters
	The company is headquartered at the above operative address. The legal address is the one registered at the Secretary of State of Delaware and is that of the registered agent.
Comments on location:
	The company is incorporated in Delaware for taxes purposes. However it is headquartered in South Carolina.
Branches:
	The company has branches in different states in US.

Shareholders - Manager - Related Companies

Listed at the stock exchange:
	NO
Shareholders Parent Company(ies):
	This is a private company and it is a subsidiary of Springs Global Participações S.A, this company operates in the Sao Paulo Stock Exchange under the symbol of SGPS3. Av Magalhaes Pinto, n. 4000 - parte, Planalto Montes Claros, 39404-166 Brazil P: +55 38 40 09 50 00 F: +55 38 40 09 51 10
Management:
	Josué Christiano Gomes da Silva, Chairman and CEO Tom O'Connor, President Edward Cardimona, Chief Global Creative Officer Torrence Shealy, Vice President Leslie Gillock, Vice President of Brand Management

Financials - COMMERCIAL TRENDS AND FORECAST

As a private company, the subject does not publish any financial statements.

The parent company is a public company traded at the stock exchange. Please find enclosed the financial statements.

We have contacted Janice who refused to provide us any financial data without knowing the name of the inquiring party.

Legal Fillings

There are several UCCs files listed with the Secretary of State of South Carolina.

There are no legal filings listed with the District Court.

For information:

The Uniform Commercial Code (UCC) is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.

The UCC deals primarily with transactions involving personal property (movable property), not real property (immovable property).

It allows a creditor to notify other creditors about a debtor’s assets used as collateral for a secured transaction by filing a public notice (financing statement) with a particular filing office.

The Uniform Commercial Code Bureau files and maintains on financial obligations (including IRS liens) incurred by individuals (in business as a sole proprietor), business entities and corporations.

Rating

Local credit bureau gave a correct credit rate. The company is in Good Standing. This means that all local and federal taxes were paid on due date.
Final Opinion
	The company has 6 years in the business. It is a large sized American company, evolving in a competitive sector. We did not find a specific adverse record against the subject. Profitability is negative, indebtedness is medium, cash is good and payments are regular. We suggest working with guarantees while monitoring the evolution of the company.

SUMMARY

FINANCIAL SUMMARY		DEBT COLLECTIONS AND PAYMENTS
Profitability	NEGATIVE	Public Records	NO
Indebtedness	MEDIUM	Payments	REGULAR
Cash	GOOD

APPENDIX

Person Interviewed
	Janice
Position
	Finance Department
Comments
	She refused to provide and verify information without knowing the name of the inquiring company.

company Financial data

Income Statement Annual Data

Currency in Millions of Brazilian Reals	As of:	Dec 31 2007 Restated BRL	Dec 31 2008 Reclassified BRL	Dec 31 2009 Restated BRL	Dec 31 2010 BRL
Revenues		3,552.2	2,882.5	2,396.2	2,315.1
TOTAL REVENUES		3,552.2	2,882.5	2,396.2	2,315.1
Cost of Goods Sold		3,273.0	2,529.5	2,058.5	1,929.4
GROSS PROFIT		279.2	353.0	337.7	385.7
Selling General & Admin Expenses, Total		409.3	332.8	346.9	359.5
Other Operating Expenses		137.9	29.3	38.5	-3.4
OTHER OPERATING EXPENSES, TOTAL		547.2	362.1	385.4	356.1
OPERATING INCOME		-268.0	-9.1	-47.7	29.6
Interest Expense		-93.0	-65.4	-46.5	-53.0
Interest and Investment Income		19.1	24.4	20.7	18.3
NET INTEREST EXPENSE		-73.9	-41.0	-25.8	-34.7
Currency Exchange Gains (Loss)		48.8	-168.2	157.4	37.1
Other Non-Operating Income (Expenses)		-41.0	-38.6	-38.1	-45.8
EBT, EXCLUDING UNUSUAL ITEMS		-334.2	-257.0	45.9	-13.9
Merger & Restructuring Charges		--	-24.4	-0.3	-1.3
Gain (Loss) on Sale of Assets		--	-16.6	-8.6	-3.4
Other Unusual Items, Total		--	-64.0	-7.4	1.7
EBT, INCLUDING UNUSUAL ITEMS		-334.2	-362.0	29.5	-16.9
Income Tax Expense		-33.3	-19.6	-11.1	1.5
Minority Interest in Earnings		--	--	-1.6	-3.6
Earnings from Continuing Operations		-300.9	-342.4	40.6	-18.4
NET INCOME		-300.9	-342.4	39.0	-22.0
NET INCOME TO COMMON INCLUDING EXTRA ITEMS		-300.9	-342.4	39.0	-22.0
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS		-300.9	-342.4	39.0	-22.0

Income Statement Quarterly Data

Currency in Millions of Brazilian Reals	As of:	Dec 31 2009 Restated BRL	Jun 30 2010 BRL	Sep 30 2010 BRL	Dec 31 2010 BRL
Revenues		531.4	607.8	580.1	529.4
TOTAL REVENUES		531.4	607.8	580.1	529.4
Cost of Goods Sold		446.6	512.2	479.6	442.3
GROSS PROFIT		84.9	95.7	100.5	87.1
Selling General & Admin Expenses, Total		88.5	92.5	90.8	87.9
Other Operating Expenses		15.5	2.8	-0.8	-5.6
OTHER OPERATING EXPENSES, TOTAL		104.0	95.2	90.0	82.3
OPERATING INCOME		-19.1	0.4	10.5	4.7
Interest Expense		-11.7	-10.4	-14.7	-16.5
Interest and Investment Income		2.8	3.7	1.7	6.6
NET INTEREST EXPENSE		-8.9	-6.7	-13.0	-9.9
Currency Exchange Gains (Loss)		45.3	13.6	15.5	-2.2
Other Non-Operating Income (Expenses)		-3.2	-13.6	-12.8	-5.3
EBT, EXCLUDING UNUSUAL ITEMS		14.0	-6.3	0.2	-12.7
Merger & Restructuring Charges		-0.3	--	--	-1.3
Gain (Loss) on Sale of Assets		-8.6	--	--	-3.4
Other Unusual Items, Total		-7.4	--	--	1.7
EBT, INCLUDING UNUSUAL ITEMS		-2.3	-6.3	0.2	-15.8
Income Tax Expense		-3.8	-11.5	26.8	-16.7
Minority Interest in Earnings		-0.4	-1.1	-1.1	-0.3
Earnings from Continuing Operations		1.5	5.2	-26.6	0.9
NET INCOME		1.0	4.1	-27.7	0.6
NET INCOME TO COMMON INCLUDING EXTRA ITEMS		1.0	4.1	-27.7	0.6
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS		1.0	4.1	-27.7	0.6

Balance Sheet Annual Data

Currency in Millions of Brazilian Reals	As of:	Dec 31 2009 Restated BRL	Jun 30 2010 BRL	Sep 30 2010 BRL	Dec 31 2010 BRL
Assets
Cash and Equivalents		58.7	65.1	31.2	141.3
TOTAL CASH AND SHORT TERM INVESTMENTS		58.7	65.1	31.2	141.3
Accounts Receivable		476.7	395.9	423.5	501.2
Other Receivables		68.1	48.2	46.2	42.5
TOTAL RECEIVABLES		544.8	444.1	469.7	543.7
Inventory		537.1	589.1	600.9	544.0
Other Current Assets		18.3	55.0	28.6	64.7
TOTAL CURRENT ASSETS		1,158.9	1,153.2	1,130.3	1,293.8
Gross Property Plant and Equipment		2,386.5	2,413.5	2,391.5	2,393.6
Accumulated Depreciation		-1,241.6	-1,305.5	-1,300.8	-1,317.1
NET PROPERTY PLANT AND EQUIPMENT		1,144.9	1,108.0	1,090.6	1,076.5
Goodwill		51.4	52.2	50.8	50.6
Accounts Receivable, Long Term		8.0	6.8	5.6	4.9
Deferred Tax Assets, Long Term		105.2	121.5	109.1	126.2
Other Intangibles		26.1	26.5	26.2	26.2
Other Long-Term Assets		214.1	184.7	92.4	105.8
TOTAL ASSETS		2,708.7	2,652.8	2,505.0	2,684.0
LIABILITIES & EQUITY
Accounts Payable		308.1	332.9	286.8	236.2
Accrued Expenses		51.8	66.0	86.5	50.6
Short-Term Borrowings		29.2	33.2	8.2	275.6
Current Portion of Long-Term Debt/Capital Lease		227.4	103.0	85.2	65.3
Current Income Taxes Payable		16.7	16.1	2.3	13.6
Other Current Liabilities, Total		16.3	10.7	23.2	17.7
TOTAL CURRENT LIABILITIES		649.4	561.7	492.2	659.0
Long-Term Debt		140.8	213.7	197.5	186.8
Minority Interest		16.3	17.7	18.8	18.3
Unearned Revenue, Non-Current		50.5	57.1	58.8	64.0
Pension & Other Post-Retirement Benefits		76.2	76.7	70.5	69.3
Deferred Tax Liability Non-Current		9.7	2.1	--	--
Other Non-Current Liabilities		72.1	44.6	39.0	57.3
TOTAL LIABILITIES		998.8	956.0	858.0	1,036.4
Common Stock		1,691.2	1,691.2	1,691.2	1,691.2
Retained Earnings		38.4	31.8	4.1	4.7
Comprehensive Income and Other		-36.1	-44.0	-67.2	-66.6
TOTAL COMMON EQUITY		1,693.5	1,679.1	1,628.2	1,629.3
TOTAL EQUITY		1,709.8	1,696.8	1,647.0	1,647.6
TOTAL LIABILITIES AND EQUITY		2,708.7	2,652.8	2,505.0	2,684.0

Additional information

SPRINGS GLOBAL PARTICIPAÇÕES S.A. (Parent Company)

The management of Springs Global Participações S.A. submits, for the consideration, its Management’s discussion and analysis of financial condition and results of operations and its Financial Statements for the years of 2010 and 2009. Such information, prepared in accordance with International Financial Reporting Standards (IFRS), as well as with Brazilian accounting practices and standards established by the Brazilian Securities Exchange Commission (“CVM”), is accompanied by its Independent Auditors’ report.

The year of 2010 was marked by an enormous liquidity injection in the world financial markets as a way of economic recovery from the financial crisis that took place at the end of 2008. The extremely low interest rates, which resulted from the liquidity surplus, and the fiscal expansion in the major economies were able to reverse the sharp GDP drop that was experienced worldwide in 2009.

Brazil has fared exceptionally well throughout the crisis. For the first time in decades, their government was able to adopt counter-cyclical fiscal and monetary policies and to launch programs to finance investments with interest rates and terms consistent with the productive activities. The reductions in indirect taxes, adopted as an incentive instrument to the purchase of certain durable goods, also generated a positive effect on consumption and the result was a significant recovery in economic growth.

Brazil's GDP, which had been stagnating in 2009, a celebrated result considering the enormous crisis experienced by all major economies in the world during that year, has continued with the strong recovery that started in the second half of 2009, and reached the historic mark of 7.5 % growth.

More important than the growth of the Brazilian gross domestic product was the quality of it: the expansion has been driven by the growth of private and public investment, which accounted for over 19% of GDP in 2010. The withdrawal of consumption and investment incentives began in an orderly and prudent way, in order to prevent the incipient recovery from losing strength, while avoiding aggregated demand surplus that could generate inflationary pressures.

However, the international liquidity surplus, with massive amount of dollars seeking easy return, has greatly increased the difficulty in managing the macroeconomic environment. The currency war: the policy adopted by China, of pegging its currency to the U.S. dollar, keeping it very undervalued, and the "quantitative easing" adopted by the United States, with the issuance of hundreds of billions of paper money, reduced, greatly, the degrees of freedom of their economic authorities. On the one hand, the flood of dollars into their economy has increased the harmful overvaluation of the Real. Billions of dollars have found safe haven in their economy by taking advantage of the still very high real interest rates prevailing in Brazil. The result was a further accelerated deterioration of their balance of trade. On the other hand, the depreciation of the dollar, the demand recovery in most developed economies and the strong increase of consumption in emerging countries have led to significant increases in mineral and agricultural commodities prices, resulting in inflationary pressures. If, in developed countries, due to high unemployment rates, the transmission mechanisms of inflation shows no risk at the moment, in developing countries, the over heated labor market may lead to high inflationary cycle.

The higher costs in less developed countries have already triggered serious political unrest as they are beginning to see in North Africa. Also in the political arena, Brazil is an example to the world. In 2010, they elected all their governors, their representatives in the Legislative Assemblies, all their Federal Representatives and two thirds of their Senators in a very beautiful democratic celebration. Additionally, in a legendary election, they chose the first woman elected President of their nation, Dilma Rousseff.

This was the macroeconomic and political environment in which Springs Global has operated throughout 2010. Despite the challenges caused by the increase in commodity prices, particularly in cotton prices, the improvement in the results of operations of the Company was substantial. Total sales reached R$ 2.8 billion, the same amount as last year. This performance was only possible thanks to the 29.2% sales growth in the Brazilian market, as overseas sales also struggled due to the 11.6% appreciation of the real against the dollar. Sales in Brazil accounted for 44.9% of consolidated net sales in 2010, an important improvement compared to 33.6% from the previous year. Gross profit progressed positively, even though they have been impacted by increased costs of our

products caused by the extraordinary increase cotton prices. Earnings before interest, taxes, depreciation and amortization improved 136%.

Their results were not better due to the strong impact of the cotton price increase in their costs. Their suppliers started to adjust their prices almost daily and at the same intensity with which the prices of this noble textile fiber hit record highs. Nobody could have expected such exaggerated highs that, at times, seemed to be more a reflection of panic. Cotton increased by approximately 200% and the contracts that they held with their Asian suppliers were not fulfilled by them. In addition to the adjustments in prices requested by their suppliers, there were also reductions in payment terms, bringing a strong need for additional working capital. Naturally, the price adjustment for their retail customers did not occur at the same speed, which strongly impacted their margins and caused a decrease in sales volume in the United States.

The domestic textile industry is likely to benefit, whenever the cotton market stabilizes. Brazil is a net cotton exporter and the Brazilian textile industry can buy cotton at export prices, having a discount over the price in the New York International Cotton Exchange (ICE). Even though China is the world's largest producer of cotton, it is also the world's largest importer and pays premium prices for it, in comparison to ICE prices. This premium has increased with the new price levels of cotton. This important differential in the price of raw materials helps to minimize, in some cases eliminating, the competitive advantage in the conversion costs that Asian producers have in relation to the domestic industry.

These costs (conversion) become less significant in the total costs of goods sold as a result of the increase in raw materials. The price of cotton should remain high during 2011, even though there is a projected increase of approximately 25% of the planted area in Brazil. The Company managed to ensure supply for the year 2011 at reasonable prices, even though above 2010 average prices.

2010 was a positive year for their retail sales. mmartan® continues with its expansion program of its store network and, throughout 2011, plans to open another 40 new stores that will be added to the existing 137 at the end of this year. They will launch a new flag in 2011: Casa Moysés. Focused on consumers with higher purchasing power, the new network should reach, in the coming years, more than 40 stores. It will offer, exclusively, in addition to the prestigious brand Casa Moysés, very traditional brands that are sold in the U.S.: Court of Versailles and Wamsutta, taking advantage of the large scale of their North American operations. In the United States, their efforts in product development, innovation and the launching of new brands are being recognized. The DVF Home line is having tremendous success and they are confident that the Nate Berkus line, as well as Espacio’s joint-venture with the brilliant architect Sami Hayek, will be as well received as the DVF Home line.

They are confident that the persistent work and the planned investments will provide their shareholders good rates of return. After all, the company has significant operating leverage. They can grow in the Brazilian market, having a greater share of installed production capacity. In the United States, the current team and infrastructure will support the sales growth of their trademarks products, diluting fixed costs and resulting in improved profitability of the operations.

The economy’s outlook is favorable and, in Brazil, the company will grow at above-market rates, allowing domestic sales to account for an increasing percentage share of Springs Global’s total sales. Springs Global will be prepared to face adversities and to take advantage of opportunities that arise. Adherence to the Market Arbitration Panel.

The Company, its shareholders, administrators and members of the Fiscal Council, undertake to resolve through arbitration all and any disputes among them related to or arising from, especially, the application, validity, effectiveness, interpretation, violation and related effects of the Company’s Bylaws, Law 6,404/76, the norms of the National Monetary Council (CMN), the Central Bank of Brazil and the Securities and Exchange Commission of Brazil (CVM), any other laws or regulations applicable to the general functioning of the capital markets, as well as the Novo Mercado Regulations and the Regulations of the Market Arbitration Panel.

Relationship with Independent Auditors

In 2010, the Company did not engage its independent auditors for services other than those related to the year-end audit. Acknowledgements They would like to express their appreciation to SUDENE, BNDES, BDMG, BNB, Banco do Brasil, their commercial banking group, the press, their customers and suppliers, their shareholders, government officials, trade and social organizations, their associates and everyone that has contributed directly or indirectly to the achievement of the Company’s social goals.

Management’s Discussion and Analysis

Montes Claros, March 30, 2011 – Springs Global Participações S.A. (BOVESPA: SGPS3, Bloomberg: SGPS3:BZ), the world leader in the bed, table and bath home furnishings industry, submits, for the consideration, its Management’s discussion and analysis of financial condition and results of operations and its Annual Financial Statements for the year ended December 31, 2010 and 2009. Such information, prepared in conformity with the International Financial Reporting Standards (“IFRS”) as well as standards established by the Brazilian Securities Exchange Commission (“CVM”), is accompanied by its Independent Accountants’ report. The following financial and operational information for Springs Global Participações S.A. (“Springs Global” or “Company”) is presented, unless otherwise indicated, on a consolidated basis, in Brazilian Reais (R$), and the comparisons, except when stated otherwise, are with the year of 2009.

Net sales by segment

Sales in Brazil have continued to present strong growth. Consolidated net sales in the amount of R$2,315.1 million in 2010 were 3.4% lower than consolidated net sales in 2009, reflecting a 4,7% decrease in sales volume

in tons and a 1.3% increase in the average price.

Net sales in the Fashion bedding segment - The decrease of 8.6%, from R$956.9 million in 2009 to R$875.0 million in 2010, reflects a 10.6% decrease in sales volume in tons, partially offset by a 2.3% increase in the average price. Even though there was an increase in fashion bedding sales in Brazil, it was not enough to offset the reduction in sales in the North American market. The 2.3% increase in the average price in 2010 is primarily due to an improved mix of sales and the higher percentage of sales in Brazil in the total sales of the Company.

Cost of goods sold

Cost of goods sold decreased by by 6.3%, from R$2,058.5 million in 2009 to R$1,929.4 million in 2010.

Materials – Material costs decreased by 8.5%, from R$1,356.5 million in 2009 to R$1,240.7 million in 2010. As a percentage of net sales, material costs decreased from 56.6% in 2009 to 53.6% in 2010. The decreases in material costs and material cost as a percentage of net sales are mainly attributed to the higher percentage of products manufactured by their Brazilian subsidiary in the total of products sold. Conversion costs – Conversion costs increased by 1.5%, from R$535.4 million in 2009 to R$543.5 million in 2010. Conversion costs increased as

a percentage of net sales, from 22.3% in 2009 to 23.5% in 2010. This increase is due to the higher percentage of products manufactured by their Brazilian subsidiary in the total of products sold.

Warehousing and distribution costs

Warehousing and distribution costs decreased by 23.4%, from R$57.8 million in 2009 to R$44.3 million in 2010, reflecting lower sales volume in the North American market and the appreciation of the Brazilian Real on the translation of the costs of their U.S. subsidiary. As a percentage of net sales, warehousing and distribution

costs decreased from 2.4% in 2009 to 1.9% in 2010

Depreciation of production and distribution assets

Depreciation expenses of production and distribution assets were R$108.8 million in 2009 and R$100.9 million in 2010.

OPERATIONS

Springs Global Participações S.A. (the “Company”), domiciled in Montes Claros – MG, Brazil, was incorporated on November 24, 2005 and, on January 24, 2006 received as capital contribution 100% of the shares of Coteminas S.A. (“CSA”) and Springs Global US, Inc. (“SGUS”), privately-held companies headquartered in Brazil and in the United States, respectively, whose shareholders were Companhia de Tecidos Norte de Minas - Coteminas (“CTNM”) and the former shareholders of Springs Industries, Inc. (“SI”), respectively. On April 30, 2009, the Company acquired a controlling interest in Springs e Rossini Participações S.A. (“SRPSA”), the parent of MMartan Têxtil Ltda (“MMartan”).

On July 27, 2007, the Company’s stock began trading on the “Bolsa de Valores, Mercadorias e mFuturos” – BM&FBOVESPA S.A., in the “Novo Mercado” segment, under the code “SGPS3”. The Company functions as the holding company of CSA and SGUS, companies that focus their manufacturing and distribution operations on bed and bath linens, previously carried out by CTNM and SI. This joint venture created the world’s largest textile industrial complex of bed linens and bath products, with production units in Brazil, Argentina, the United States, and Mexico. The Company also manufactures products with strong brand names, such as Springmaid, Wamsutta, Regal, Artex, Santista, Paládio, Calfat, Garcia, Arco Íris, Magicolor, among others. The Company’s products have a privileged market standing on the shelves of the largest and most demanding retail channels of the world. The Company’s products are sold in the United States and Canada by SGUS through its vast distribution chain that is close to the largest retailers in those markets. In Brazil and Argentina, its products are sold by CSA and its subsidiary Coteminas Argentina S.A.

Beginning on April 30, 2009, the Company became the controlling shareholder of SRPSA with 64.7% equity interest. SRPSA functions as the holding company of MMartan, a company specialized in retailing bed, bath and table top linen products with high value-added.

Standard & Poor’s

United States of America Long-Term Rating Lowered To 'AA+' Due To Political Risks, Rising Debt Burden; Outlook Negative

Publication date: 05-Aug-2011 20:13:14 EST

---

· We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

· We have also removed both the short- and long-term ratings from CreditWatch negative.

· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

· The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

TORONTO (Standard & Poor's) Aug. 5, 2011--Standard & Poor's Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. Standard & Poor's also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for

debt service--remains 'AAA'.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions ," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements,

the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.49.07
UK Pound	1	Rs.77.42
Euro	1	Rs.67.72

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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