Superior credit ratings under review on $375m SPC purchase

15 November 2002 19:13  [Source: ICIS news]

TORONTO (CNI)--Two credit ratings agencies Friday placed the ratings of Canada’s Superior Propane under review on concern over Superior’s acquisition of Sterling Pulp Chemicals (SPC) for $375m (Euro371m).

But Superior president and chief executive Geoff Mackey said today that the company is determined to maintain its investment grade credit rating and stressed that Superior has financing for the deal.

Standard & Poor’s (S&P) and Dominion Bond Rating Service (DBRS) said in separate statements that their reviews will focus on the competitive position of SPC’s business, Superior’s balance sheet and its financing of the acquisition.

DBRS described the SPC deal as "a company-transforming acquisition" for Superior. S&P added that it expects Superior’s risk profile may change with the acquisition. Both agencies are seeking additional information before deciding whether to maintain Superior’s credit rating.

Mackey said that Superior would initially finance the deal with a bridge loan, which will later be replaced by a combination of equity and long-term debt. He stressed: "We want to maintain our investment grade credit rating."

He conceded that the purchase of SPC might also be "a bit of an insurance policy" for Superior should authorities here demand that the company reduce its dominant market share in propane.

Calgary, Alberta-based Superior, Canada’s largest distributor of propane, finds it hard to grow its core propane business here, analysts said.

S&P is based in New York City. DBRS and SPC are based in Toronto.

By: Stefan Baumgarten
+1 713 525 2653

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