S&P affirms Gerdau Ameristeel

Standard & Poor's said it affirmed its ratings on Gerdau Ameristeel Corp., including its BB+ corporate credit rating.

At the same time, all ratings are removed from CreditWatch where they were placed with negative implications on July 11, the agency said, following the company's announcement that it was acquiring unrated Chaparral Steel Co. for $4.2 billion in an all-cash transaction.

The outlook is negative.

"The affirmation reflects Gerdau's strong recent performance, the guarantee of the acquisition financing by 66% owner Gerdau SA (BBB-/negative) and a recent $1.6 billion public issuance of common stock that was used to repay bridge financing," said S&P credit analyst Marie Shmaruk.

"While the company's pro forma credit measures are weak for the rating, we expect Gerdau Ameristeel to apply free cash flow to reduce debt balances in this uncertain economic environment."

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