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BHP Billiton's shares slump in Australia on lack of stock buyback, demerger plans

SYDNEY--BHP Billiton's shares closed almost four percent lower in Australia Wednesday, as investors fled over the lack of a stock buyback and the global mining giant's demerger plans.

The slump came as global credit agencies affirmed their ratings for the world's biggest miner and maintained a stable outlook.

The stock closed 3.91 percent lower at AU$38.13 (US$35.43), with the sell-off following a similar scenario in London where the firm is also listed.

The company on Tuesday reported weaker-than-expected underlying earnings of US$13.4 billion and a net profit of US$13.8 billion.

BHP also outlined a proposal to create a new independent company by demerging non-core assets, including some of its aluminum, coal, manganese, nickel and silver operations.

But the Anglo-Australian resource major failed to announce the estimated US$3.0 billion share buyback that some analysts had been expecting.

Moody's and Standard and Poor's said their credit ratings for BHP remained unchanged, reflecting their expectations the split would have only a “minimal impact” on the company.

“The rating affirmation reflects the minimal impact that the proposed spin-off will have on BHP Billiton's business and financial profiles,” said Moody's senior analyst Matthew Moore.

Standard & Poor's credit analyst May Zhong said the “new, leaner” firm was not expected to experience “materially different” cash flow volatility despite the moderate reduction in asset and commodity diversity.

Investors Disappointed

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