Moody's reviews Caltex for downgrade

Moody's Investors Service said it placed on review for downgrade the Baa1 issuer rating of Caltex Australia Ltd.

The rating action follows the announcement by Caltex that it received a non-binding, indicative and conditional proposal from EG Group Ltd. to acquire all shares in Caltex. This is in addition to the improved proposal from Alimentation Couche-Tard, Inc. on Feb. 13. Following the EG Group proposal, the Caltex board decided to provide Alimentation Couche-Tard with the opportunity to conduct additional due diligence on a non-exclusive basis.

“While it is too early to comment on the probability of the various possible outcomes, we expect any acquisition will likely be credit negative for Caltex, with more downside risk to the rating expected from an acquisition by EG than from the higher-rated Alimentation Couche-Tard,” said Ian Chitterer, a Moody's vice president and senior credit officer, in a press release.

“The best-case scenario for Caltex's credit profile would be no acquisition, in which case there would be no change to Caltex's rating, but with the two competing bidders, that seems increasingly unlikely,” added Chitterer.

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