Moody’s alters TMK view to stable

Moody’s Investors Service said it revised the outlook for PAO TMK and subsidiary TMK Capital SA to stable from positive. Concurrently, the agency affirmed TMK’s B1 corporate family and B1-PD probability of default ratings and the B1 senior unsecured rating on TMK Capital’s notes.

The rating action follows TMK’s announcement it will acquire 86.54% shares in Chelyabinsk Pipe Plant PJSC in a debt-financed transaction, the agency said. TMK will pay RUB 84.2 billion for the acquired stake using cash on its balance sheet and acquisition financing, valuing 100% of the equity at more than RUB 97 billion.

“This acquisition will allow TMK to solidify its position in high value-added OCTG pipes, expanding the company’s offering in the industrial pipes, where ChelPipe has strong market positions, leading to a material strengthening of TMK’ scale, competitive position and the share in the Russian pipes market,” said Denis Perevezentsev, a Moody’s vice president and senior credit officer, in a press release.

“Taking into account that the transaction is funded out of TMK’s cash balances reinforced by acquisition financing, the transaction will be leveraging to TMK, which to some extent will be offset by a strong contribution of ChelPipe’s cash flows and EBITDA into the combined entities’ financial metrics, resulting in the change of the rating outlook to stable from positive,” Perevezentsev said.

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