S&P places Arch Coal on developing watch

Standard & Poor's said it placed Arch Coal Inc.'s BB- corporate credit rating on CreditWatch with developing implications.

Key factors of the analysis would include a review of the combined business risk profile and the ultimate form of financing for the acquisition of International Coal Group Inc., S&P said.

The agency also said it is placing International Coal's B+ corporate credit rating on CreditWatch with positive implications.

This is because International Coal is being acquired by a higher-rated entity and the existing debt is expected to be refinanced as part of the acquisition financing, S&P said.

This transaction will provide additional thermal and met coal reserves, enhance geographic and customer diversity and add to Arch's presence in the high-growth global met coal markets, the agency said.

But, S&P said it is aware that integrating an acquisition of this size could prove challenging.

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