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ARCO CHEMICAL CO. CP RATED 'F-1' BY FITCH -- FITCH FINANCIAL WIRE --

 ARCO CHEMICAL CO. CP RATED 'F-1' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, June 29 /PRNewswire/ -- ARCO Chemical Co.'s commercial paper is rated 'F-1' by Fitch. The company may issue up to $500 million of commercial paper, always fully supported by the undrawn portion of its $500 million revolving credit facility. This is Fitch's initial rating for the company.
 ARCO Chemical enjoys strong global market positions in its three core petrochemical products, even in the face of lively competition from large petroleum and chemical companies. These market shares are underpinned by low-cost and 'greener' process technologies, and a concentration on a few products, most of which can grow at trend rates exceeding GNP growth. The company continues to mitigate its commodity price risk through a variety of supply, sales, and pricing arrangements.
 With its major capacity expansion essentially completed, capital spending over the near term is forecast at approximately $250 million annually, compared with outlays in the $500 million annual range in recent years. The company anticipates no further major expansion until perhaps later this decade, and then only if global market conditions justify reinvestment economics. Thus, with some recovery in demand and prices, and even with an above-average dividend payout, Arco Chemical's cash sources and uses should soon approach breakeven, with a return to surplus cash flow generation thereafter.
 Although it operates in a cyclical business, the company exhibits a solid financial profile at cycle lows and a strong one during cyclical upturns. At the current cycle low, debt leverage and cash flow debt coverage are both in the 40 percent range, and pretax cash flow covers gross interest about five times. With the company in a self-financing phase, these ratios are expected to improve gradually. Creditors enjoy another cushion, as market values are more than twice book equity.
 ARCO Chemical Co., based in Newtown Square, PA, makes a variety of value-added petrochemicals which it upgrades via its propylene oxide co- product technology. The company has a manufacturing presence in the Americas (59 percent of 1991 sales of $2.8 billion), and in Europe (35 percent), and serves the Pacific Rim (6 percent) through exports. The company also has a joint venture in Japan. Atlantic Richfield Co. owns 83.4 percent of ARCO Chemical's issued and outstanding shares.
 -0- 6/29/92
 /CONTACT: Mary Anne Sudol, 212-908-0562 or Raymond T. Carty 212-908-0595, both of Fitch/
 (RCM) CO: ARCO Chemical Co. ST: Pennsylvania IN: CHM SU: RTG


LD -- NY079 -- 4922 06/29/92 17:27 EDT
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Publication:PR Newswire
Date:Jun 29, 1992
Words:417
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