S&P cuts Halliburton's credit rating
Dallas Business Journal
Credit rating agency Standard & Poor's Corp. on Tuesday cut Halliburton Co.'s (NYSE: HAL) credit rating by two notches, citing concerns the oil field services company may suffer from a "material increase'' in costs for resolving asbestos-related claims.
Shares of Dallas-based Halliburton dove 42 percent Dec. 7 after it announced a Baltimore jury awarded $30 million in asbestos damages against its Dresser Industries unit, bringing recent asbestos liability awards against the company to more than $150 million.
The stock closed unchanged Tuesday at $14 a share.
S&P downgraded Halliburton's long-term corporate rating to "A-minus," its fourth lowest investment grade, from "A-plus," and its short-term corporate credit and commercial paper ratings to "A2" from "A1.'' Its outlook on the debt remains negative.
The rating agency said Halliburton, which was headed by Vice President Dick Cheney until August 2000, already faces $152 million of asbestos-related jury verdicts and judgments. It said it "is concerned that the recent results and award amounts could portend a material increase in the resolution costs of asbestos-related claims.'' It said this could raise litigation costs and prompt plaintiffs to seek higher awards.
"The strength of our balance sheet and our underlying core businesses mean we can look forward to returning to our A-plus rating," Halliburton CEO Dave Lesar said in a statement.
Halliburton has $250 million of cash, enough to meet 16 percent of its debt, the company said. It also has $2.7 billion of working capital and $700 million in credit lines. Halliburton said it has reduced its debt to 25 percent of capitalization from 40 percent. Company Web site: http://www.halliburton.com.
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