Moody's: Falconbridge, Inco view developing

Moody's Investors Service said it affirmed the Baa3 senior unsecured debt ratings of both Inco and Falconbridge and changed the outlook of both companies to developing. The change in outlook was prompted by the C$17.8 billion unsolicited bid to acquire Inco Ltd. by Teck Cominco Ltd.

Moody's said Teck Cominco's bid is conditional on Inco not completing its planned takeover of Falconbridge Ltd. and the termination of the support agreement between Inco and Falconbridge.

In Moody's view, the conditionality of Teck's bid makes it unlikely to succeed absent a competing bid for Falconbridge that is accepted by Falconbridge's board.

The affirmation of the ratings of Inco and Falconbridge reflect the size, diversity, strong cash flows and asset positions of the companies, whether combined or not, and Moody's view that metals prices will continue to be robust over the near term, albeit at lower levels than exist today, the agency said.

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