Fitch affirms Mazeikiu Nafta

Fitch Ratings said it affirmed Mazeikiu Nafta AB's issuer default rating at B+ and removed it from Rating Watch positive. The short-term rating was affirmed at B.

The outlook is positive.

The affirmation follows Mazeikiu Nafta's ownership change as a result of PKN Orlen SA's acquisition of the company. PKN Orlen took operational control on Friday after the acquisition of a 53.7% stake in Mazeikiu Nafta from Yukos International UK BV for $1.492 billion and a 30.66% stake from the Lithuanian government for $852 million.

The agency said the positive outlook reflects the potential benefits for Mazeikiu Nafta from operating as part of the PKN Orlen group, which has a stronger business and financial profile. PKN Orlen as a new owner of Mazeikiu Nafta supports the Lithuanian company's capital expenditure program of around $1 billion, which Fitch said should transform Mazeikiu Nafta into a modern refinery with integrated petrochemicals facilities.

The agency said upgrade potential depends on Mazeikiu Nafta's projected cash flow development, which is to a large degree subject to the timing of the resumption of Russian crude oil pipeline delivery to Mazeikiu Nafta and the restoration of Mazeikiu Nafta's refinery to full capacity in the fourth quarter of 2007 after the fire in October.

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