Fitch Ratings said that it believes that Uttam Galva Steel Ltd's sale of a material minority stake to ArcelorMittal is unlikely to impact UGSL's current ratings.
Fitch notes that ArcelorMittal's acquisition of around 5% of UGSL creates a moderate linkage between UGSL and the stronger ArcelorMittal which, in the absence of any change in UGSL's current business plan, could positively impact UGSL's ratings.
Fitch believes if there is a substantial change in the current business plan leading to a debt led CAPEX materially impacting the credit metrics of the company, this may off set the positives brought in by the linkages with ArcelorMittal.
The details of the business plan post completion of transaction with ArcelorMittal including its configuration, time lines and funding pattern have yet to be finalized. Fitch will evaluate the impact of the planned business plan on UGSL's credit profile as and when it is finalized.
ArcelorMittal announced it had acquired around 5% of UGSL from its sponsors on September 5th2009, which has reduced the existing sponsor holding to around 40%.
(Sourced from http://www.steelguru.com/news/index/2009/09/11/MTExMjA3/UGSL_stake_sale_to_ArcelorMittal_likely_to_impact_rating_-_Fitch.html)
Thursday, September 10, 2009
UGSL stake sale to ArcelorMittal likely to impact rating - Fitch
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