Fitch downgrades Tristan Oil

Fitch Ratings said it downgraded Tristan Oil Ltd.'s long-term foreign-currency issuer default rating to CC from B+ and senior unsecured rating to C from B+ with a recovery rating of RR5.

The issuer default rating remains on Rating Watch negative, and the debt rating was placed on Rating Watch evolving.

The agency said the downgrade reflects its concern about lack of transparency in the structure of the company's recent debt issuance transaction and its concerns that under certain scenarios there is the possibility that existing bondholders' positions could be adversely affected.

On June 18, Tristan placed an additional $111.11 million of eurobonds with Laren Holdings Ltd., a BVI special-purpose entity that is owned by a charitable trust, whose beneficiaries at present remain unclear, Fitch said. The bonds were placed at a significant discount to face value - $30 million - but represent a further senior unsecured obligation for Tristan of the entire $111.11 million.

The agency said the stated purpose of the placing is for payment of the outstanding balance of excess profit tax owed by the operating companies, Kazpolmunai and Tolkynneftegas, and for other general corporate purposes.

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