Re: Repost S&P credit rating - Outlook now negative
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Reuters Story - December 14, 1997 23:20
%AU %AAA %DBT %ENR %MET BHPX NABX V%REUTER P%RTR
MELBOURNE, Dec 15 (Reuters) - Standard and Poor's Corp said
on Monday that it affirmed the "A" long-term and "A-1"
short-term ratings of The Broken Hill Proprietary Co Ltd (BHP).
The ratings agency said the company's outlook has been
revised to negative from stable.
"BHP's ratings reflect a diverse portfolio of mining and
metals businesses, which offsets an exposure to volatile
commodity prices. However, BHP's adjusted level of gearing is
high for the rating category and accentuates the credit risk if
commodity prices and key market demand levels weaken," S&P said.
It said BHP had a range of additional mineral projects about
to commence. "However, a forecast large capital expenditure
programme, incorporating a cost overrun in an iron ore project,
in conjunction with a potential weakening of the Asian markets,
is likely to offset additional cash flow from the new and
expanded operations."
Explaining the revised outlook, S&P said BHP's financial
performance and prudential measures were weak for the rating
level due to underperforming assets and significant
restructuring initiatives.
"BHP must achieve efficiency gains from its existing asset
base and successfully commission new projects, while potentially
facing weaker business conditions in major markets," it said.
BHP has four major operating divisions -- copper, minerals,
steel and petroleum. It had been ranked as the nation's largest
listed company until recent months when it was overtaken by
National Australia Bank Ltd .
BHP shares were 56 cents lower at A$12.68 at 3.50 p.m. (0450
GMT), giving the company a market capitalisation of A$25.6
billion.
-- Sydney newsroom 61-2 9373-1800
email: sydney.newsroomreuters.com
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