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LyondellBasell buyout may affect RIL`s rating: Moody`s

Last Updated: Monday, November 23, 2009 - 21:37

New Delhi: Moody`s on Monday said the proposed acquisition of Dutch firm LyondellBasell may put downward pressure on the credit rating of Reliance Industries, but the global rating agency will wait for more details on the deal before taking any action.

"Depending on the total size of the deal and whether or not the acquisition is to be majority debt funded, it could result in downward pressure on RIL`s current Baa2 (two notches above the speculative grade) credit rating," Moody`s said in a statement.

The agency, however, added that it is not taking any action at this stage since the offer is preliminary and non- binding and subject to due diligence.

"Moody`s will give a more detailed response if and when
the transaction materializes after the due diligence process,"
the rating agency said.

The Netherlands-based LyondellBasell said last week RIL
has made a non-binding cash offer to take a controlling
interest in it when it exits bankruptcy. LyondellBasell, the
world`s third-largest chemical company, had filed for
bankruptcy in January.

If a deal comes through, it would be one of the largest
international acquisitions by an Indian company and would
create a global energy and chemicals powerhouse.

There will be a range of key issues to be considered by
the rating agency which would impact RIL`s business and
financial profile.

The issues would be the funding structure for the
transaction and resulting financial profile, business and
operating profile of the combined entity and also the group`s
long term financial strategy.

The rating could be downgraded if the financial metrics
of the combined entity weaken, Moody`s said.

Moody`s last rating on RIL was done on March 2 when the
agency affirmed the company a stable outlook. This was
following the announcement of RIL`s merger with its
subsidiary, Reliance Petroleum.


First Published: Monday, November 23, 2009 - 21:37
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