S&P: Exco remains on watch

Standard & Poor's said the ratings on Exco Resources Inc. will remain on CreditWatch, where they were placed with negative implications in November 2010.

The CreditWatch follows news that its chairman and chief executive had submitted a buyout proposal to the board of directors for all the outstanding shares of Exco stock not owned by him at a cash price of $20.50 per share, S&P said.

Based on current shares outstanding, the purchase price would be significantly more than $4 billion and could entail debt financing, the agency said.

If Mr. Miller's buyout proposal is successful, whether in whole or in part, then leverage may meaningfully increase, negatively affecting credit quality, S&P said.

The proposal also reflects an aggressive financial policy that was not previously factored in the ratings and that may negatively affect the corporate credit and issue-level ratings, the agency added.

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