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TEXT-S&P: DuPont ratings unchanged on repurchase agreement
December 13, 2012 / 3:00 PM / 5 years ago

TEXT-S&P: DuPont ratings unchanged on repurchase agreement

Dec 13 - Standard & Poor's Ratings Services said today that its ratings on
E.I. DuPont de Nemours & Co. (A/Stable/A-1) remain unchanged following
DuPont's announcement of a $1 billion share repurchase program that it plans to
execute in 2013 with a portion of the proceeds from the sale of its coatings
business. The company intends to use the majority of the approximately $4
billion in expected net proceeds to reduce net debt. We believe that net debt
reduction with the sale proceeds and discretionary cash flow generated in 2013
should be sufficient to return credit metrics to levels appropriate for the
ratings by the end of 2013, including funds from operations (FFO)-to-net
adjusted debt of 35%-40%. Thereafter, we expect further net debt reduction so
that credit measures remain appropriate for the ratings even when seasonal
working capital is at its peak. 

However, we could lower the ratings if DuPont does not produce the low-to 
mid-single digit percentage earnings growth from continuing operations that 
management is projecting in 2013. Any shortfall would call into question our 
assumption that in addition to the remaining divestiture proceeds DuPont will 
generate substantial discretionary cash flow in 2013 and use it to reduce net 
debt. A downgrade would also result if further shareholder rewards or other 
unforeseen events keep credit measures subpar for the ratings. At Sept. 30, 
2012, FFO-to-net adjusted debt was 23%, with net debt elevated following the 
approximately $7 billion acquisition of Danisco A/S in 2011.

RELATED CRITERIA AND RESEARCH
     -- Methodology And Assumptions: Liquidity Descriptors For Global 
Corporate Issuers, Sept. 28, 2011 
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
Sept. 18, 2012 
     -- Key Credit Factors: Business And Financial Risks In The Commodity And 
Specialty Chemical Industry, Nov. 20, 2008 
     -- Key Credit Factors: Criteria For Rating Companies In The Global 
Commodity Chemicals Industry, Sept. 19, 2012

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