S&P puts OMZ on developing watch

Standard & Poor's said it placed Russia-based OAO OMZ's (Uralmash-Izhora Group) CCC+ long-term corporate credit and ruBB national scale ratings on CreditWatch with developing implications following the announced acquisition of more than 75% of the company by a group of investors represented by Gazprombank (BB/positive/B).

S&P said the CreditWatch placement reflects the strong upside potential for OMZ resulting from this change of control; the benefit the company's business position might experience from restructuring efforts and new order inflow if the new shareholders are related to the government, as reported; and the boost the company's weak financial profile might get through new financing and liquidity support from Gazprombank or the government.

Nevertheless, the existing significant level of uncertainty regarding the identity of the new shareholders and their strategy toward the company's businesses and finances leave room for a limited, but probable, downside scenario, the agency said. It has been reported that the new shareholders might reorganize the company, which could lead OMZ's debtholders to present debt for early repayment, depending on how the reorganization will be carried out.

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