S&P may up Tom Brown

Standard & Poor's said it placed its A- long-term corporate credit and senior unsecured debt ratings, and its BBB global scale preferred stock rating on EnCana Corp. on CreditWatch with negative implications following the company's announcement of its proposed $2.7 billion acquisition of Tom Brown Inc. S&P also affirmed its A-1(Low) Canadian national scale commercial paper rating on the company.

At the same time, S&P placed its BB+ long-term corporate credit and BB- subordinated debt ratings on Tom Brown on CreditWatch with positive implications, as Tom Brown's credit profile will improve materially following the proposed acquisition.

"Although Tom Brown's assets and their associated production economics are consistent with EnCana's existing U.S. asset portfolio, the CreditWatch placement reflects the uncertainty regarding the impact a US$2.7 billion debt-financed acquisition will have on EnCana's overall credit profile," said S&P credit analyst Michelle Dathorne. "In the past two years, EnCana has consistently overspent its generated cash flows, and this acquisition places considerable strain on the company's credit profile at the current ratings level."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.