Thomas,
here is an interesting article that I have copied from the "Egoli Foru", News and Views section, at egoli.atwww.com.au
There are some other articles dealing with BHP in the "News and Views" section.
"December 15, 1997
Standard and Poor's said "The outlook for BHP has been revised to negative from stable". S&P also confirmed BHP's long-term debt rating at A today and its short term rating at A-1 but said it had revised the outlook to negative because of its exposure to volatile commodity prices.
S&P said "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. BHP's financial performance and prudential measures are weak for the rating level, as a result of underperforming assets and significant restructuring initiatives undertaken. BHP must achieve efficiency gains from its existing
asset base and successfully commission new projects, while potentially facing weaker business conditions in major markets,". BHP closed down $0.58 to $12.65.
S&P also said "BHP's purchase of US Co Magma Copper in 1995 had not yet improved the miner's cash flow enough to offset the increased debt it took on to fund the purchase. The fiscal 1997 cash flow to debt ratio of about 27 per cent is low for the ratings category and reflects the increased debt usage to fund the purchase of Magma, which has yet to translate into stronger cash flows".
S&P commented that BHP planned to reduce its leverage and that it was in the process of adopting a "more conservative prudential framework."
S&P ratings of BHP were supported by its strong business position generated from its diverse activities across iron ore, coal and other minerals and its diverse new mineral production to commence in the near term." |
