RATING RATIONALE

"The newly assigned CFR of B2 reflects the company's small scale and limited geographic diversity relative to large global brewers," said Linda Montag, Moody's Senior Vice President. NAB operates predominantly in the US, with pockets of regional strength aligned with its four breweries which are on the coasts, and a very light presence in the middle of the country. NAB's operating margins are thin due to portfolio mix and scale disadvantages relative to much larger peers. A meaningful amount of the company's volumes are from contract brewing which is not very profitable, and certain other brands that also dilute profitability. Lower margins are somewhat offset by its more profitable craft brands and Seagram's Escapes, while Labatt brands make a solid and stable contribution. Significant acquisition activity over the past few years has led to the creation of the portfolio as it exists today, so the longer term track record of managing brands which are strong in disparate regions of the country remains to be seen. Moody's expects EBITA margins to remain in the high single digit range in the next 12-18 months.

These speculative grade elements are offset by NAB's good liquidity and moderate leverage. Moody's estimates that the company's Debt/EBITDA (calculated using Moody's accounting adjustments) will be in the 3.5 to 4.5 times range in the next 12 to 18 months. While the company is small relative to other global, deep-pocketed brewers in the North American market, it has good growth prospects thanks to its portfolio of craft, import, flavored malt beverages and other popular brands. In addition, Moody's believes that the new owner, Costa Rican based Cerveceria Costa Rica S.A., which has its own interests in beer in Central America, can be considered more of a strategic owner than previous private equity owner KPS Capital Partners, a potential positive due to sharing of best practices and possible revenue synergies.

The proposed bank facilities will be secured by substantially all of the tangible and intangible assets of the borrower. We expect the company to have at least a 30% cushion under its most restrictive financial covenants at all times.

Ratings Assigned:

Corporate Family Rating at B2

Probability of Default rating at B2

Senior secured Term loan B at B2, LGD 4, 52%

To achieve an upgrade, NAB will need to demonstrate its ability to profitably grow its business and generate consistent positive free cash flow to enable leverage reduction. Improving the profitability of its larger brands and growing the scale of certain smaller but more profitable brands would be a plus. Quantitatively, an upgrade would be considered if EBITA margin were to be sustained above 9% and leverage declined to under 4 times, while also increasing scale.

The rating would be lowered if NAB's financial performance were to deteriorate such that EBITA margins fell from current levels, debt to EBITDA rose above 5.5 times or free cash flow were negative. Large debt financed acquisitions or shareholder returns could also result in a ratings downgrade.

The principal methodology used in rating this issuer was the Global Alcoholic Beverage Industry Methodology published in September 2009, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Credit Policy & Methodologies directory.

Headquartered in Rochester, NY, NAB's portfolio of brands includes, Genessee, Labatt brands in the US, Original Honey Brown Lager and Dundee Ales and Lagers, Seagram's Escapes, Magic Hat, Pyramid an Mac Tarnahans . NAB also performs contract brewing on behalf of other companies. The company posted sales of $432 million for the twelve months ended 9/30/2012.

REGULATORY DISCLOSURES

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Linda Montag Senior Vice President Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Peter H. Abdill, CFA MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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