S&P lowers Freeport-McMoRan view to negative

Standard & Poor's said it revised the outlook on Freeport-McMoRan Copper & Gold Inc. to negative from stable.

The agency also affirmed all of its ratings, including its BBB corporate credit rating.

The outlook revision follows news that Freeport-McMoRan Copper & Gold intends to acquire Plains Exploration & Production Co. and McMoRan Exploration Co. in transactions totaling $20 billion.

S&P also said it placed all ratings on Plains Exploration & Production and McMoRan Exploration on CreditWatch with positive implications due to acquisition plans that will ultimately lead to the withdrawal of those ratings.

Freeport intends to finance the acquisitions with about $9 billion of cash and stock and an incremental $9.5 billion in debt, S&P said.

The negative outlook reflects a large debt burden following these acquisitions, as well as risks associated with absorbing and integrating two oil and gas companies, said Marie Shmaruk, an S&P analyst.

Still, the rating affirmation reflects that the company's credit metrics would remain sufficient to support the current BBB rating, the analyst said.

The ratings reflect Freeport-McMoRan Copper & Gold's leading market position in copper mining, significant and diverse reserve base and low-cost Indonesian operations, S&P added.

The ratings also incorporate the risk the company faces in operating in lower-rated jurisdictions, the agency added.

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