Fitch puts Mazeikiu Nafta on positive watch

Fitch Ratings said it placed Lithuania-based Mazeikiu Nafta AB's B+ issuer default rating on Rating Watch positive following PKN Orlen SA's announcement that it has reached an agreement with Yukos International UK BV to acquire its 53.7% stake in Mazeikiu for $1.492 billion. PKN also announced that it aims to purchase a 30.66% stake in the company from the Lithuanian government for $0.852 billion, subject to approval by the Lithuanian parliament. The company's B short-term rating was affirmed.

The rating watch placement reflects Fitch's opinion that the arrival of a higher-rated new investor, PKN, is likely to improve Mazeikiu's financial flexibility and enable it to purchase crude oil on more favorable terms, i.e. without considerable cash deposits.

It will also enable the company to begin its $1 billion modernization program, which should increase its refining depth and lower its break-even crack margins in the next three to four years. Fitch said this should result in a stronger business profile.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.