DBRS places Xstrata on developing review

DBRS said it placed the ratings of Xstrata plc and its related entities (Xstrata, rated A (low), R-1 (low) and Pfd-2 (low)) under review with developing implications following the company's announcement that the directors of Glencore International plc and independent directors of Xstrata have reached an agreement on the terms of an all-share merger of Xstrata and Glencore.

DBRS believes that if a merger between Xstrata and Glencore is completed as contemplated, the financial structure of the ensuing entity could differ from Xstrata's existing financial structure, potentially leading to a change in the risk profile of Xstrata and its related companies' debt securities and, consequently, the need to re-examine the ratings of those securities and companies.

This will require a close examination of the merger documents and their implications. Accordingly, DBRS has placed Xstrata's ratings under review with developing implications until that analysis can be completed and until the potential outcome of the merger becomes more certain.

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