Ratings on BP Amoco PLC Affirmed; Burmah Castrol PLC on Watch Positive, Re: Acquisition

PARIS (Standard&Poor's CreditWire) March 14, 2000--Following the announcement that BP Amoco PLC--one of the world's largest private oil and gas groups--has agreed to buy Burmah Castrol PLC--one of the world's leading manufacturers and marketers of specialized lubricants and chemicals--Standard&Poor's today affirmed its ratings on BP Amoco and related entities and placed its ratings on Burmah Castrol and related entities on CreditWatch with positive implications. The outlook on BP Amoco and its related entities remains stable (see list below for all ratings affected). The offer, for about £3 billion (US$4.7 billion) in cash, has been recommended by Burmah Castrol's board and is subject to regulatory clearance. If the acquisition is completed as planned, Burmah Castrol's credit quality

...ratings on Burmah Castrol could be equalized with those of BP Amoco. The lubricants businesses of BP Amoco and Burmah Castrol will be merged to form a new lubricants division, resulting in expected annual pretax cost savings of about US$260 million by 2003. The implementation costs of merging these two businesses are expected to total about US$390 million and will be booked as a charge in 2000. Burmah Castrol will bring to BP Amoco one of the world's leading lubricants brands, with profitable and very strong positions in a range of both mature and emerging markets; it will only marginally strengthen BP Amoco's already superior business positions, however, since lubricants will still compose only a very small percentage of BP Amoco's operating profit. The Castrol lubricants business of Burmah Castrol generated earnings before interest and taxes (EBIT) of ú213 million (about US$334.4 million) in 1999, versus BP Amoco's company-wide EBIT of US$8.9 billion. Financially, although the offer is...

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