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S&P: Asset sale favors Kerr-McGee
Standard & Poor's said that Kerr-McGee Corp.'s (BB+/negative/B) announcement that it has entered into purchase and sale agreements to sell its North Sea operations favors the company's credit quality.
Kerr-McGee is selling its North Sea operations for about $3.5 billion in cash and the assumption by the purchasers of all related abandonment obligations and derivative liabilities. The company expects to receive net after-tax cash proceeds of about $3.1 billion that it plans to use to reduce debt.
Although this is a favorable development for the ratings on the company because the net proceeds are higher than expected, there is no immediate impact on the ratings or outlook, S&P said.
The ratings incorporate the expectation for more than $4 billion of debt reduction from asset sales, divestitures, and free operating cash flow. The ratings and outlook remain unchanged as they are based on the expectation of rapid deleveraging after the company's debt-funded $4 billion share repurchase earlier this year, the agency said.
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