Fitch affirmed Severstal's issuer default at BB-, senior unsecured also BB-, short-term B and national long-term A+(rus) ratings, with a stable outlook.
"The rating action follows the automatic termination of the company's previously announced merger with the Luxembourg-based Arcelor S.A., following today's vote opposing the transaction by a majority of the latter's shareholders," Fitch said. "The ratings had been placed on Watch Positive on 26 May 2006 following the announcement of the merger with Arcelor."
Arcelor shareholders rejected a merger with Severstal earlier Friday in favor of a bid from the world's No. 1 Mittal Steel. Shareholders representing 57.94% of Arcelor's stock voted the Severstal bid down, following the board's recommendation to support what it saw as a better deal with Mittal.
The Severstal deal would have gone through if shareholders holding at least half of Arcelor's stock had voted for it. Now, the Luxembourg-based company will have to pay 140 million euros ($175 million) to the Russian company in compensation.
