S&P: MMK still on watch

Standard & Poor's said it placed its BB- long-term corporate credit ratings on OAO Magnitogorsk Metallurgical Kombinat on CreditWatch negative, reflecting uncertainties about the financing of the purchase of a 17.8% stake in MMK from the Russian government and a 16.7% stake from Mechel Group.

S&P said the CreditWatch placement reflects the potential impact of the acquisition of the government stake for $790 million and the Mechel stake for $780 million (plus $90 million compensation to waive any claims between Mechel and MMK).

The acquisitions could increase MMK's debt beyond levels compatible with the current ratings and might go beyond the risks associated with the privatization of the government stake that S&P had already factored into the ratings on MMK.

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