Moody's confirms BHP Billiton's ratings; Outlook negative
Approximately US$9.0 billion of debt securities affected
Sydney, May 02, 2008 -- Moody's Investors Service has today confirmed the A1 senior unsecured
rating and P-1 short term rating of BHP Billiton Ltd and its guaranteed
subsidiaries. The outlook is negative.
The ratings were placed on review for possible downgrade in February 2008
following the all-equity takeover offer for Rio Tinto for a consideration
of 3.4 BHP Billiton shares for 1 Rio Tinto share, equivalent
to approx. $146 billion at the time of the offer.
"The confirmation of the rating reflects the fact that a significant
amount of time will elapse before the takeover is complete, together
with ongoing material uncertainty regarding the likelihood of success
of the offer on the terms announced" says Terry Fanous, Senior Vice
President.
"The negative outlook reflects the risk that the transaction may proceed
at some point in the next 12 months" Fanous further says, adding
"If this were to occur, and the transaction were to complete on
the announced terms, then it would likely result in BHP Billiton's
senior unsecured rating being either A1 or A2".
Moody's commented that if the transaction completes substantially on the
terms announced by BHP Billiton, then the key issues for determining
whether the rating would be A1 or A2 include integration challenges and
the increased financial leverage due partly to additional debt to part-fund
the $30 billion share buy-back contemplated in the takeover
offer. The uncertainty regarding any regulatory-mandated
asset sales and the group's ongoing financial policy are other factors
that will influence the rating outcome.
"At the same time, the final rating will consider the equity-funded
nature of the transaction which will further enhance the group's
position as the world's largest commodity group by far", Fanous
adds. The acquisition of Rio Tinto gives BHP Billiton a dominant
status in almost every metals and mining product category, in addition
to the unique benefits generated by the petroleum division.
The combined group will enjoy significant free cash flow generation,
benefiting from its very extensive operations and solid commodity fundamentals
particularly bulk commodities and petroleum. The final rating would
consider BHP Billiton's plan to deploy its free cash flow (after capex
and dividends) and any asset sales towards balance sheet de-leveraging.
Outlook Actions:
..Issuer: BHP Billiton Finance (USA) B.V.
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: BHP Billiton Finance (USA) Limited
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: BHP Billiton Finance B.V.
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: BHP Billiton Finance Limited
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: BHP Billiton Limited
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: BHP Billiton Plc
....Outlook, Changed To Negative From
Rating Under Review
..Issuer: WMC Finance (USA) Limited
....Outlook, Changed To Negative From
Rating Under Review
Confirmations:
..Issuer: BHP Billiton Finance (USA) B.V.
....Senior Unsecured Commercial Paper,
Confirmed at P-1
..Issuer: BHP Billiton Finance (USA) Limited
....Senior Unsecured Commercial Paper,
Confirmed at P-1
....Senior Unsecured Regular Bond/Debenture,
Confirmed at A1
....Senior Unsecured Shelf, Confirmed
at (P)A1
..Issuer: BHP Billiton Finance B.V.
....Senior Unsecured Medium-Term Note
Program, Confirmed at A1
..Issuer: BHP Billiton Finance Limited
....Multiple Seniority Medium-Term
Note Program, Confirmed at A1
....Senior Unsecured Commercial Paper,
Confirmed at P-1
....Senior Unsecured Medium-Term Note
Program, Confirmed at A1
....Senior Unsecured Regular Bond/Debenture,
Confirmed at A1
..Issuer: BHP Billiton Limited
....Senior Unsecured Commercial Paper,
Confirmed at P-1
....Senior Unsecured Medium-Term Note
Program, Confirmed at A1
..Issuer: BHP Billiton Plc
....Senior Unsecured Commercial Paper,
Confirmed at P-1
....Senior Unsecured Medium-Term Note
Program, Confirmed at A1
..Issuer: Ohio Water Development Authority
....Senior Unsecured Revenue Bonds,
Confirmed at A1
..Issuer: WMC Finance (USA) Limited
....Senior Unsecured Regular Bond/Debenture,
Confirmed at A2
..Issuer: WMC Finance Ltd.
....Senior Unsecured Medium-Term Note
Program, Confirmed at A2
BHP Billiton is the world's largest diversified natural resources company,
with operations in petroleum, iron ore, metallurgical coal
and manganese, alumina and aluminum, energy coal and base
metals, stainless steel materials, uranium and diamonds.
Headquartered in Melbourne, Australia, BHP Billiton generated
consolidated turnover (excluding joint ventures) of US$39.5
billion for FYE 30 June 2007. Rio Tinto is one of the world's largest
diversified mining groups with substantial interests in alumina and aluminum,
copper, iron ore, coal, uranium, diamonds,
and industrial minerals (titanium dioxide feedstock, salt,
and talc). Headquartered in London, England, Rio Tinto
generated revenues of roughly $29.7 billion over the 12
months ended 31 December, 2007 (includes 3 month contribution from
Alcan Inc).
Sydney
Terry Fanous
Senior Vice President
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100
Sydney
Brian Cahill
Managing Director
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100