Standard & Poor's Ratings Services placed its ratings on Walter Energy, including its BB- corporate rating, on CreditWatch with developing implications, the ratings agency said Thursday.
S&P, like Platts, is a division of the McGraw-Hill Companies.
The move came after the Tampa, Florida-based metallurgical coal producer and exporter said earlier Thursday it has submitted a proposal to acquire Canadian producer Western Coal for C$11.50/share (US$11.28/share) in cash and company stock in a deal with an enterprise value set at about C$3.2 billion.
Walter also added that it entered into a 14-day agreement with Western Coal whereby the companies will work with each other exclusively to negotiate a sale and, in a separate deal, agreed to buy 19.8% of Western's outstanding shares from Audley Capital for about C$615 million.
"We could affirm, raise, or lower existing ratings following the completion of our analysis if a definitive purchase agreement were to be entered into between Walter and Western Coal," S&P said, adding that key factors of its analysis would include a review of the strategic plans for the combined entity and the ultimate form of financing.
While Walter's acquisition of Western Coal would benefit Walter's business-risk profile and significantly diversify its production base, S&P credit analyst Marie Shmaruk said "in our view, the manner of financing a transaction of this size could have a material impact on our assessment of the company's overall financial-risk profile."
S&P, like Platts, is a division of the McGraw-Hill Companies.
The move came after the Tampa, Florida-based metallurgical coal producer and exporter said earlier Thursday it has submitted a proposal to acquire Canadian producer Western Coal for C$11.50/share (US$11.28/share) in cash and company stock in a deal with an enterprise value set at about C$3.2 billion.
Walter also added that it entered into a 14-day agreement with Western Coal whereby the companies will work with each other exclusively to negotiate a sale and, in a separate deal, agreed to buy 19.8% of Western's outstanding shares from Audley Capital for about C$615 million.
"We could affirm, raise, or lower existing ratings following the completion of our analysis if a definitive purchase agreement were to be entered into between Walter and Western Coal," S&P said, adding that key factors of its analysis would include a review of the strategic plans for the combined entity and the ultimate form of financing.
While Walter's acquisition of Western Coal would benefit Walter's business-risk profile and significantly diversify its production base, S&P credit analyst Marie Shmaruk said "in our view, the manner of financing a transaction of this size could have a material impact on our assessment of the company's overall financial-risk profile."
