Moody's: Transoil possible acquisition 'credit negative'

Moody's Investors Service said that it would view Transoil LLC's potential acquisition of a 75% minus two shares stake in Russia's major rail cargo operator, Freight One JSC, as credit negative.

This follows the announcement by Transoil that it has submitted an application to participate in the auction for this stake.

In Moody's view, the acquisition would be credit negative for Transoil, assuming that it makes a successful bid for the stake and that it goes on to finance the transaction with debt.

The agency said Transoil's credit metrics would likely be negatively affected following completion of the acquisition, given that the initial auction price of nearly $4 billion represents 8.8x the company's EBITDA at end-2010.

Russian Railways, the current owner of 100% minus one share in Freight One, will conduct the auction on Oct. 28.

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