S&P warns on Anglo debt risk

[miningmx.com] — STANDARD & Poor’s, a rating agency, affirmed Anglo American’s credit ratings, but warned the diversified miner’s debt position could deteriorate should the purchase of its shares in Anglo American Sur fail to materialise.

“In our base-case scenario, we assume a $6.9bn increase in net debt for Anglo American, before cash and potential post-retirement and asset-retirement obligations, as a result of this transaction,” S&P said on Anglo American’s offer last week for the Oppenheimer family’s stake in De Beers.

The deal is expected to take Anglo American’s net debt to $13.7bn, according to estimates – an amount that would be offset if Chile’s state-owned miner, Codelco, makes good on its intention to exercise its option in Anglo American Sur, a transaction that would bag Anglo about $5.1bn.

“The price of Anglo American Sur is not yet known, but judging from the amount of financing Codelco has attracted for this transaction, up to $6.75bn, and the need for Anglo to pay capital gains tax, we anticipate that the cash inflow may be similar to the $5.1bn cash payment for De Beers,” S&P said.

“Consequently, in our base-case scenario, the impact of the two transactions on Anglo American’s debt should be limited,” it said.