April 3 – Standard & Poor’s Ratings Services today said that its ratings and
outlook on Finning International Inc. (BBB+/Stable/–) are unaffected
by the company’s issuance of US$300 million in aggregate unsecured notes due
between 2022 and 2027. These notes will rank pari passu with Finning’s existing
senior unsecured obligations. The company will use the proceeds from the notes
to fund the acquisition of the South American operations of Bucyrus
International Inc.’s distribution business. Finning had previously announced
that it would acquire the former Bucyrus distribution and support business from
Caterpillar Inc. (A/Stable/A-1) in its territories across western Canada, South
America, the U.K., and Ireland, for approximately US$465 million. In our view,
the Bucyrus distribution business will strengthen Finning’s business risk
profile because it will provide the company with a new growth opportunity as
well as strengthen its market position within the mining sector, which is
Finning’s largest end market. The company’s current leverage is about 2.5x and,
while the proposed acquisition will lead to a slight increase in leverage from
current levels, we expect Finning’s year-end 2012 fully adjusted leverage to be
2.5x-2.8x; this leverage, however, remains within our expectations at the
current rating level.
