Moody's may cut TMK

Moody's Investors Service said it placed TMK's Ba3 corporate family rating and B1 rating for loan participation notes on review for possible downgrade following the acquisition of a business by Evraz Group.

TMK will acquire 100% of IPSCO Tubulars Inc. and 51% of NS Group Inc., the agency said. In addition, TMK and Evraz have entered into a call/put option for the remaining 49% of NS Group Inc., which will be exercised in 2009 for about $0.5 billion.

Moody's said TMK had some room in its existing rating, but this transaction can be characterized as transformative for TMK by its relative size and the significant increase in the geographical footprint that it brings to the company.

The review will focus on the strategic logic and execution risk of the transaction given the existing sizeable capital expenditure program of the company, Moody's said.

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