S&P affirms Posco

Standard & Poor's said it affirmed its long-term corporate credit and senior unsecured debt ratings on Posco following news that it was selected as a preferred bidder to acquire 68.1% of Daewoo International Corp. The estimated acquisition cost is about KRW 3.4 trillion to KRW 3.5 trillion.

The deal will be closed after Posco completes comprehensive due diligence and final negotiations by August or September 2010.

S&P said it believes that the acquisition should have a limited impact on the ratings, given the company's current ample cash position, low leverage and strong cash flow generation capability, even if Posco's financial position deteriorates somewhat.

The agency said it expects Daewoo's strong expertise in its trading business and strong global network will support Posco's global strategy to expand capacity in Korea, India and Indonesia.

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