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S&P cuts Kerr-McGee to junk
Standard & Poor's said it lowered its corporate credit rating on Kerr-McGee Corp. to BB+/B from BBB-/A-3. The rating remains on CreditWatch negative where it was placed on March 4.
S&P said the downgrade follows today's announcement that Kerr-McGee's board of directors has authorized a modified Dutch auction tender offer for up to $4 billion of its common stock.
The share repurchase will be funded entirely through the issuance of debt and borrowings under new credit facilities, which S&P said materially harms the company's credit profile.
External pressures on management to enhance shareholder value have been a major rating concern associated with the CreditWatch listing, according to S&P.
S&P said the ratings are supported by a good business position in the cyclical, volatile exploration and production segment of the oil and gas industry and attractive near-term fundamentals in the oil and gas sector.
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