Fitch Places Rompetrol Group on Rating Watch Negative Fitch Ratings-London/Warsaw-16 September 2010:

Posted: September 17, 2010 in Burse
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Fitch Ratings has today placed Netherlands-based The Rompetrol Group N.V.’s (TRG) Long-term foreign currency Issuer Default Rating (IDR) of ‘B+’ on Rating Watch Negative. Today’s rating action reflects the negative impact of the recent decision by Romania’s National Agency for Fiscal Administration (ANAF) to levy a distraint upon some assets of Rompetrol Rafinare (RRC), the main operating subsidiary of TRG. This decision relates to convertible bonds of EUR570m (USD740m), due on 30 September 2010, which were issued to the Romanian state in 2003 as part of the conversion of RRC’s state budget liabilities. ANAF also said in a statement that, according to its interpretation of the law, once the redemption option was chosen by the company when RRC repaid a portion of the convertible bonds (EUR54m) in August 2010, the remaining bonds cannot be converted to equity and have to be repaid by the maturity date. This interpretation is inconsistent with the company’s plan to partially repay the bonds and to convert the majority of the bonds into equity, which is supported by TRG’s interpretation of the law and the convertible bond documentation. As a result of the bond to equity conversion, the state, as the sole holder of the convertible bonds, would become a minority shareholder of RRC. RRC’s shareholders meeting has recently approved the plan to convert the remaining bonds into equity on 30 September 2010. Fitch continues to assume in TRG’s projections that RRC will convert the majority of the convertible bonds into shares and will not repay the outstanding amount in cash (EUR516m(USD670m)). However, the RWN reflects increased government pressure on TRG and increased uncertainty regarding the final outcome of the legal dispute between ANAF and TRG. TRG’s rating is based on a bottom-up approach in line with Fitch’s parent and subsidiary rating linkage methodology. The rating reflects the company’s standalone credit profile, assessed at ‘CCC’, and a three-notch uplift for parental support from the Kazakhstan-based integrated oil and gas company KazMunaiGaz National Company (NC KMG, rated ‘BBB-‘/Stable Outlook/’F3’). NC KMG, which has been the company’s sole shareholder since July 2009, provided substantial financial support to TRG in H209. This support took the form of a USD1.1bn cash injection as an advance for a share capital increase. The proceeds from the cash injection were used mainly for repayment of bank loans and other debt, resulting in an improved standalone financial profile and liquidity position. Additional support was provided by NC KMG in the form of subordinated shareholder loans (USD596m at end-June 2010). The agency assesses strategic and legal ties between TRG and NC KMG as strong, whilst operational ties are moderate. Strong legal ties stem from a cross default provision in the documentation for the USD7.5bn Global Medium Term Note Programme of NC KMG, which also relates to TRG’s debt. TRG reported weak cash flow for 2009 and H110 mainly due to difficult conditions for oil refining companies. Its net debt grew to USD972m at end-June 2010 from USD629m at end-2009. Fitch assumes that TRG’s liquidity will continue to be supported by NC KMG. Although liquidity improved considerably following the cash injection in H209, Fitch currently views TRG’s liquidity as insufficient. At end-June 2010, TRG had USD127m in cash, against short-term debt of USD478m (excluding shareholder loans), comprising mostly bank loans. Fitch believes that refinancing risk related to shareholder loans of USD596m, due in March 2011, is low, due to support from NC KMG. Contact: Primary Analyst Arkadiusz Wicik, CFA Director +48 22 338 6286 begin_of_the_skype_highlighting +48 22 338 6286 end_of_the_skype_highlighting Fitch Polska S.A. Zielna 37 00-108 Warsaw, Poland Secondary Analyst Angelina Valavina Director +44 (0) 20 7682 7383 begin_of_the_skype_highlighting +44 (0) 20 7682 7383 end_of_the_skype_highlighting. Committee Chairperson Erwin Van Lumich, CFA Head of EMEA Energy, Utilities & Regulation Senior Director +34 93 323 8403 begin_of_the_skype_highlighting +34 93 323 8403 end_of_the_skype_highlighting Media Relations: Peter Fitzpatrick, London, Tel: + 44 (0)20 7417 4364 begin_of_the_skype_highlighting + 44 (0)20 7417 4364 end_of_the_skype_highlighting, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on http://www.fitchratings.com. Applicable criteria, ‘Corporate Rating Methodology’, dated 13 August 2010, ‘Parent and Subsidiary Rating Linkage Criteria Report’ dated 14 July 2010 and ‘Credit Rating Methodology for Refiners’, dated 9 November 2007, are available at http://www.fitchratings.com. Applicable Criteria and Related Research: Corporate Rating Methodology Parent and Subsidiary Rating Linkage Criteria Report Credit Rating Methodology for Refiners ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: http://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM’. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. 101 Finsbury Pavement, London, EC2A 1RS

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