Tata Steel stays on S&P''s ''CreditWatch Negative'' after Corus deal finalisation
04 Apr 2007
Singapore:
Standard & Poor''s Ratings Services today announced
having kept its ''BBB'' long-term corporate credit rating
on Tata Steel Ltd. on CreditWatch with negative implications.
The ''BBB'' debt rating on Tata Steel''s senior unsecured
bank loans of US$750 million and $500 million also remain
on CreditWatch with negative implications.
This comes after the announcement on the completion of
the procedure for the takeover of the UK-based steel maker
Corus Group PLC (Corus) (BB/Watch Dev/B) by Tata Steel,
which became effective on 2 April, 2007 (See: Tata
Steel completes Corus acquisition). The ratings
were placed on CreditWatch on 18 October, 2006, after
Tata Steel''s initial bid for Corus at 455 pence per share.
"The CreditWatch status of Tata Steel continues to
reflect ongoing uncertainty regarding the long-term financial
structure of the transaction and its implications on the
merged entity, potentially raising greater financing challenges
for the company and further downward pressure on its rating,"
said Standard & Poor''s credit analyst Anshukant Taneja.
"There is also a likelihood that the ratings on Tata
Steel and Corus will remain different."
In resolving the CreditWatch placement, Standard &
Poor''s will seek further information on the means of financing
and integration by Tata Steel.
Tata Steel is India''s second-largest integrated steel
company, with finished steel capacity of 5 million tonnes
per annum (mtpa). In the year ended March 31, 2006, Tata
Steel generated revenues of Indian rupee (INR) 202 billion
(US$4.5 billion) and net profit of INR37 billion.
Corus
is the second-largest steel manufacturer in Europe and
ranks ninth globally, with a production capacity of 20.8
mtpa. For the year ended December 2005, Corus reported
revenues of £10.14 billion (US$19 billion) and net
profit of £452 million.
After the Corus acquisition, the combined entity now ranks
the fifth largest steel maker globally.
