Fitch affirms Evraz

Fitch Ratings said it affirmed Evraz Group SA's issuer default and senior unsecured ratings at BB and its short-term rating at B following the announcement that the company plans to acquire Oregon Steel Mills, Inc. for $2.3 billion.

Fitch also affirmed the BB issuer default rating, B short-term rating and stable outlook of Mastercroft Ltd., Evraz's core subsidiary with most of its assets concentrated in Russia. Evraz Securities SA's senior unsecured rating was affirmed at BB.

The acquisition will be financed by $500 million in cash and $1.8 billion in new debt. The additional debt will not have a material negative impact on Evraz's credit metrics, Fitch said. Assuming the actual acquisition will take place in 2006, Fitch expects the net debt-to-EBITDA ratio of the consolidated entity to reach 1.55x, which is roughly in line with the net debt-to-EBITDA ratio of 1.5x ceiling set by the company. Both Evraz and Oregon Steel Mills are profitable and have moderate credit profiles, the agency said.

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