Freeport-McMoRan Copper & Gold rating

Standard and Poor’s Ratings Services said it has upgraded its corporate rating of Freeport-McMoRan Copper & Gold due to the “marked improvement of Freeport’s business profile and position in the mining industry.”

The corporate credit rating was upgraded Wednesday from “BB-“to “BB.”

In a statement issued Wednesday, S&P Credit analyst Thomas Watters said the friendly takeover of U.S. mega-copper miner Phelps Dodge by New Orleans-based Freeport in a transaction valued at $26 billion augments Freeport’s “reserves, production and geographic diversity while somewhat mitigating Freeport’s exposure to the political and legal risks of operating in Indonesia, which historically have been key risk factors in the assessment of Freeport’s corporate credit rating.”

The terms of the acquisition include $18.5 billion in cash, of which $16 billion will be through new debt offerings, with the remainder in common stock. After the transaction is completed, Freeport will be the world’s second-largest copper producer.

S&P rated Freeport’s outlook as stable, based on an expectation that “through companies initiatives to reduce debt, and our belief that commodity prices during the near term will remain at relatively high levels, Freeport should make meaningful progress, is significantly reducing its aggressive debt leverage,” according to Watters.

Standard and Poor’s estimated total adjusted debt at $18 billion.

source:www.mineweb.net