Baku, Azerbaijan, Mar. 11
By Leman Zeynalova – Trend:
National Company KazMunayGas’s (NC KMG) planned disposal of a 51 percent stake in KMG International NV (KMGI) to CEFC China Energy Company Limited will probably have a neutral effect on NC KMG’s credit profile, Fitch Ratings international ratings agency said in a message.
“The finalization of the transaction announced in December 2015 is pending the satisfaction of multiple conditions including an approval by the Romanian government,” reads the message. “The parties expect the deal to close in mid-2017. Fitch estimates that although the transaction would further strengthen NC KMG’s liquidity, the company’s gross leverage will be broadly unaffected.”
“In December 2016 NC KMG and CEFC renewed the sale and purchase agreement (SPA) with respect to the stake in KMGI,” the ratings agency said. “This confirms CEFC’s commitment to the deal despite the ongoing investigation by Romania’s Directorate for Combating Organized Crime and Terrorism (DIICOT).”
The announced $680 million in disposal proceeds is positive factor for NC KMG, while deconsolidation of EBITDA (measure of operating performance, equals to earnings before interest, tax, depreciation and amortization) generated by KMGI’s refining, marketing and trading businesses would be negative, Fitch’s analysts said.
Fitch continues to consolidate KMGI in NC KMG’s financials as the deal has not been finalized.
Fitch puts more emphasis on NC KMG’s gross financial metrics.
Fitch maintains KMGI on Rating Watch Negative (RWN). Fitch will resolve the RWN following the completion of the disposal and clarification of the outcome of the investigation by the DIICOT.
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