Fitch downgrades Polyus Gold to BB-

Fitch Ratings said it downgraded Polyus Gold International's and PJSC Polyus Gold's long-term issuer default ratings to BB- from BBB-, removed them from Rating Watch Negative and assigned a negative outlook.

The downgrades follow completion of the cash offer with regard to Polyus Gold International by a combination of Sacturino Ltd. and Wandle Holding – companies that are ultimate controlled by the Suleyman Kerimov Foundation and Said Kerimov.

Following the cash offer, Polyus Gold International has been delisted from the London Stock Exchange and its board of directors dissolved.

Fitch said it believes that the future corporate governance profile of the group will be weaker and that future credit metrics will be materially weaker than those historically recorded by the company.

The agency assumed that proceeds from a recent $2.5 billion seven-year loan attracted by PJSC Polyus are planned to be upstreamed to the shareholder level by way of a share buyback program or dividend payment. In total, Fitch assumes payments totaling $2.5 billion or higher will be upstreamed to the shareholder level in 2016 to likely repay acquisition debt incurred at this level.

Assuming payments at this level, Fitch does not anticipate that the company will exceed its net debt/EBITDA covenant of 3.5 times included in bond and loan documentation.

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