New York, 08-11-98 -- Moody's Investors Service placed under review for possible upgrade the Aa2 senior unsecured long-term debt ratings of British Petroleum Company p.l.c. (BP) and the Aa1 senior unsecured long-term debt ratings of Amoco Corporation and its guaranteed subsidiaries, in response to an announced plan by the two companies to merge in an all stock transaction. The new company will be called BP Amoco p.l.c., with an equity split of 60% BP and 40% Amoco, and is subject to regulatory and stockholder approval, expected by year-end 1998.
Both companies ratings are under review for upgrade based on the new entity's status as one of the world's largest and most geographically diversified integrated petroleum companies. BP Amoco p.l.c. will have combined revenues of $107 billion, comprising about 2.8 million BOEs per day of production, enhanced upstream growth prospects, major refining and marketing systems in the U.S. and Europe (the latter through a strategic alliance between BP and Mobil Corporation), and one of the world's largest chemical companies. BP Amoco will enjoy a stronger and more stable operational and cash flow profile as a result of the merger, with highly complementary assets contributed by both companies in exploration and production, refining, distribution, marketing, and chemicals. The review will assess BP Amoco's cash flow characteristics, capital spending, and asset rationalization and cost reduction plans, as well as important longer-term capitalization issues including financial policies, targeted debt levels, and dividends. The review will also evaluate the new company's legal structure, in particular the structure and placement of existing and future debt and the degree of parent support offered to subsidiary debt obligations.
Ratings under review include British Petroleum p.l.c.'s guaranteed subsidiaries, rated Aa2, and the jointly and severally guaranteed long-term debt of Amoco Corporation and Amoco Company. Also under review for upgrade are the guaranteed senior secured notes of Windsor Petroleum Transport Corporation, rated Aa2. The Prime-1 commercial paper ratings for both companies or their guaranteed subsidiaries are confirmed, including Amoco Corporation, Amoco Company and Amoco Canada Petroleum Co. Ltd.; and BP America, Inc., BP Capital B.V., BP Capital p.l.c, and BP Finance Australia Ltd.
The British Petroleum Company p.l.c. is headquartered in London, as will be BP Amoco p.l.c. Amoco Corporation is headquartered in Chicago, Illinois.
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