S&P affirms MMK

Standard & Poor's said it affirmed its BB- long-term corporate credit rating on Russia-based OAO Magnitogorsk Metallurgical Kombinat following a strong performance in 2004.

The rating was also removed from CreditWatch, where it was placed on Dec. 23, 2004 after a group of investors affiliated with MMK management acquired a 17.8% stake in MMK from the Russian government for $790 million and a 16.7% stake in MMK from Mechel Group for $780 million, plus $90 million compensation to waive any claims between Mechel and MMK.

The outlook is stable.

S&P said the rating actions reflect S&P's opinion that MMK's favorable operating and financial performance in 2004, together with the broadly stable to positive outlook for the steel industry in 2005, should help offset the risks presented by the recent acquisition and its potential impact on MMK's financial profile and policy.

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