S&P lowers Petropavlovsk

S&P said it lowered the long-term issuer credit rating on Petropavlovsk plc to B- from B.

The agency also said it lowered to B- from B the ratings on the $500 million senior unsecured eurobond due 2022 issued by Petropavlovsk 2016 Ltd., a finance vehicle wholly owned by Petropavlovsk.

The agency also said it placed all of the ratings on CreditWatch with negative implications.

The downgrades reflect a view that the latest corporate governance developments are distracting management from day-to-day operations in a year that is key for the company's two strategic projects: the pressure oxidation (POX) facility and ramp-up of underground operations, S&P explained.

If the company is unable to launch the projects on time and achieve the expected cost reduction, the capital structure could become unsustainable, the agency said.

The agency said it understands the company's strategy and financial policy could change depending on the outcome of shareholder requests to changes in management.

The largest shareholder, Fincraft Holding, has previously supported the possibility of acquisitions, S&P said.

But if deals are not funded prudently, any transactions could increase leverage and weigh on the ratings, the agency said.

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