Reuters reported that Fitch Ratings has affirmed Evraz Group SA's foreign currency Long Term Issuer Default Rating at BB-with a Stable Outlook, Short term FC IDR at 'B' and senior unsecured rating at 'BB-'.

The affirmation follows Evraz plc's purchase of 41% indirect stake in OAO Raspadskaya through the purchase of a 50% stake in Corber Enterprises Limited.

As a result of the transaction, Evraz plc will become a major shareholder of OAO Raspadskaya with an 82% stake. Control over the coking coal mining company will allow Evraz plc to increase its self sufficiency in coking coal, one of key raw materials for steel production. This is in line with Evraz plc's strategy of strengthening its mining division.

The agency does not expect the transaction to materially affect Evraz plc's consolidated leverage, as the deal is mostly non cash. Adroliv Investments Limited the seller of Corber Enterprises Ltd's shares, will receive approximately 11.1% of Evraz plc's shares after execution of warrants, cash payment equals to USD 200 million. Evraz Group SA's credit metrics will not be affected by the transaction.

Evraz's funds from operations adjusted gross leverage decreased to 2.3x at end 2011 compared with 3.0x at end 2010. Fitch expects FFO adjusted gross leverage to increase to 3.3x-3.5x by end 2012 and deleveraging to 2.0x-2.2x by end 2014.

The ratings are supported by Fitch's expectations of positive free cash flow generation over the medium term. Evraz's ratings remain constrained by its large Russian operational base which exposes it to higher than average political business and regulatory risks.

Source - Reuters

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