S&P puts KCC on watch

S&P said it placed its BBB long-term issuer credit rating on KCC Corp. on CreditWatch with negative implications.

S&P placed KCC on CreditWatch based on a possible deterioration in key credit measures associated with the acquisition of Momentive Performance Materials Inc. (B/stable/--). KCC and a consortium announced plans to acquire 100% of Momentive for US$3 billion.

“We expect KCC to bear around USD$1.35 billion of the cost, giving KCC a 45% stake post-deal. If the company funds its portion with all debt, the adjusted debt leverage could increase from 2.8x at the end of 2017,” S&P said in a news release.

It isn't clear how the company plans to fund its contribution. Aside from the total consideration, KCC has not announced other details of the transaction, including funding, timing, financial consolidation, and whether the company will sell liquid assets to offset the impact, S&P noted.

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