Fitch: Polski Koncern still on negative watch

Fitch Ratings said it kept Poland-based Polski Koncern Naftowy Orlen SA's issuer default rating of BBB and short-term rating of F3 on rating watch negative.

The negative watch reflects Fitch's expectation that the company's credit ratios will deteriorate considerably following the acquisition of Lithuania's refinery, Mazeikiu Nafta AB (rated B+/rating watch positive).

Mazeikiu Nafta's key asset, the Mazeikiai refinery, reported a fire on Thursday that caused significant damage, and the company is likely to operate well below its full capacity for several months. The agency predicted that Mazeikiu's profitability will fall in the coming months due to decreased throughput.

In addition, Fitch described the acquired company's business profile as significantly weaker than Polski given its lower refining complexity and efficiency, more volatile cash flows, higher crude oil supply risk and lack of fuel retail hedge.

© 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.