(The following statement was released by the rating agency)
July 02 - Fitch Ratings says Petroliam Nasional Berhad’s (PETRONAS, ‘A’/Stable) proposed acquisition of Canadian-based Progress Energy Resources Corp. (Progress Energy) will not have an immediate impact on its ratings. In Fitch’s view, PETRONAS’s rating has adequate headroom - including its solid net cash position - for acquisitions of this size.
PETRONAS is rated Long-Term Foreign and Local Currency Issuer Default (IDR) ‘A’ with Stable Outlook and Short-Term Foreign Currency IDR ‘F1’.
Under the terms of the proposed acquisition, PETRONAS will pay around CAD5.5bn for 100% of Progress Energy and its outstanding convertible debentures. The transaction is expected to close by end-September 2012, subject to government and other relevant approvals. The proposed acquisition will be funded by cash on hand. At 31 December 2011, PETRONAS reported net cash and marketable securities of MYR161bn.
Following the acquisition, PETRONAS’s business profile will benefit from an increase in geographical diversification across natural gas assets in Canada. Progress Energy is reported to have 1.9 trillion cubic feet equivalent of proved and probable gas reserves. PETRONAS will seek to monetise these reserves through export of liquefied natural gas (LNG) to the higher-priced Asian markets. PETRONAS and Progress Energy have selected a site at Price Rupert in British Columbia for a potential LNG export terminal and will conduct feasibility studies for this facility. It is possible that PETRONAS may seek partners for the development stage.
PETRONAS is 100%-owned by the Malaysian government (‘A-'/Stable). Its IDRs are constrained by Malaysia’s ‘A’ Country Ceiling and sovereign Local Currency IDR (‘A’/Stable), respectively.
In addition, PETRONAS also has a foreign currency senior unsecured rating of ‘A’, including debt issued by PETRONAS Capital Limited which is guaranteed by PETRONAS. PETRONAS Global Sukuk Ltd’s USD trust certificates are rated ‘A’.