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Moody's says Elliott plan would be "credit negative" for BHP

Published 03/05/2017, 03:29 pm
Updated 03/05/2017, 03:30 pm
© Reuters.  Moody's says Elliott plan would be "credit negative" for BHP
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SYDNEY, May 3 (Reuters) - Proposals by activist investor Elliott Management to boost shareholder returns at BHP Billiton BHP.AX BLT.L would be "credit negative" for the global miner, ratings agency Moody's said on Wednesday.

BHP has rejected the proposals to collapse its dual-listed share structure, spin off its U.S. petroleum business and conduct an ongoing, off-market share buyback program. on Wednesday upgraded BHP's outlook to "positive" from "stable", saying it believes the company will continue to generate strong earnings and free cash flow in the current commodity price environment.

"However, the positive outlook is predicated on the group continuing with its current operating strategy and financial policies, and that its operating footprint will not change materially as a result of the Elliott proposals," Moody's said.

"Any material change that resulted in higher than expected shareholder returns and/or leverage would be seen as credit negative," it said.

Elliott Management representatives are in Australia this week to meet BHP shareholders over the proposals.

In the past year, Elliott has built up a 4.1 percent stake in BHP's British arm and last month told the company that it had failed to deliver "optimal" value. has labeled the proposals as flawed and warned would involve costs far beyond any benefits if implemented.

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