S&P Places Suncoke Energy (SXC) Ratings on Review for Upgrade

November 2, 2016 12:06 PM EDT

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S&P Global Ratings said it placed its ratings, including the 'B' corporate credit rating, on SunCoke Energy Inc. (NYSE: SXC) on CreditWatch with positive implications.

The CreditWatch placement follows SXC's announcement that it plans to acquire all outstanding units of SXCP, its MLP. SXC already owns approximately 54% of the outstanding MLP units and 2% of the GP stake.

SXC operates five coke making facilities in the U.S. and one facility in Brazil. It also provides metallurgical and thermal coal handling and blending services through its coal logistic business.

"The CreditWatch designation with positive implications indicates our expectation that we will be in a position to incorporate the implications of the announcement into our rating within the next 90 days," said S&P Global Ratings credit analyst Vania Dimova. "Furthermore, it indicates that, in our view, there is at least a 50% chance of an upgrade at the time of the rating resolution."

We will raise the rating once we have considered the transaction details and feel that a successful transaction is imminent. The upgrade would be based primarily on consolidated credit measures that are indicative of a higher rating for SXC, as well as increased flexibility with regard to SXCP operations, including lower distribution requirements, that we view would improve credit quality.

The rating could remain unchanged if we feel that the transaction could be materially changed, delayed, or canceled.

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