BHP Billiton Has Strength If Right Deal Comes Along - CFO
August 16 2009 - 1:43AM
Dow Jones News
BHP Billiton Ltd. (BHP.AU) Chief Financial Officer Alex Vanselow
said Sunday that the miner's balance sheet can be leveraged up if
the right acquisition target comes along.
BHP's net leverage is currently around 12%. Vanselow said that
could probably be pushed out to around 35% to 40% while maintaining
BHP's solid A-grade credit rating.
Even without considering any further acquisitions, that leverage
will move a bit higher in the coming year as BHP faces a heavy
investment and dividend return bill, Vanselow told Australian
Broadcasting Corp.'s "Inside Business" program.
The miner is due to pay A$6 billion for its joint venture with
rival miner Rio Tinto Ltd. (RTP) in the Pilbara region in early
2010. Its dividend bill is close to A$4.6 billion a year at current
levels, and it is looking to invest another A$10 billion this year
in growing its own assets organically, he said.
Vanselow reiterated that BHP's relationship with China hasn't
been affected as a result of the arrest of four Rio Tinto
executives on allegations of bribery and infringing trade secrets
in relation to iron-ore negotiations. "Nothing has changed for us.
We continue to sell into China and we're committed to our
customers," Vanselow said. He did say, however, that BHP is
monitoring the Rio Tinto situation closely, although the facts of
the case so far are scarce.
BHP has been pushing for some time for more transparent pricing
of iron ore, moving away from benchmark pricing to BHP's preferred
indexed pricing mechanism, in line with other commodities such as
copper.
-By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901;
rachel.pannett@dowjones.com