It was yesterday that U.F.I.S. Structured Holdings Limited affiliated with the MMK management won the auction on the sale of the MMK state-owned equity stake.
"The rating status in the CreditWatch list mirrors the potential impact of the purchase of the government shareholding for $790 million and the Mechel equity stake for $780 million," noted Standard & Poor's credit analyst Yelena Anankina. "This acquisition could have augmented MMK's debt burden beyond the limit corresponding to the current rating and can exceed the scope of privatization risks, which have been considered by the Standard & Poor's in the MMK rating.
Standard & Poor's is concerned about the prospect of MMK's expanding its debt burden when being at the recovery peak in the steel industry, which is fraught with the company's diminishing resistance toward any future slumps. Though Standard & Poor's makes a point of corporate management risks being able to get down as a result of the Mechel package acquisition, this positive factor will hardly make up for the negative aftermath of the growing debt.
The rating will be withdrawn from the CreditWatch list when it is clarified how the financing of these purchases can affect MMK's financial status. The rating is hardly to change by more than one step.
The U.F.G.I.S. Structured Holdings Limited affiliated with MMK management has bought the MMK equity stake at the start-up price of $790,150,000.
MMK is Russia's major black iron manufacturer, with its share in the metaloutput trade on the local market reaching 20%. The Mmagnitogorsk iron and steel works combine occupies the 16th place in the rating of the world's leading steel companies.
