Correct: Fitch Places Gerdau & Acominas on Rating Watch Negative Following Acquisition Announcement.CHICAGO -- This is a correction for a previous message issued on July 11, 2007. It amends the IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. rating of Brazilian Steel Importer Ltd. in the second paragraph. Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has placed the following ratings of Gerdau S.A. (Gerdau) and related entities on Rating Watch Negative: --Foreign currency Issuer Default Rating (IDR) 'BBB-'; --Local currency Issuer Default Rating (IDR) 'BBB-'; --National scale rating 'AA+(bra)'; --US$600 million 8.875% guaranteed perpetual notes 'BBB-'. Fitch has also placed on Rating Watch Negative the 'BBB-' local and foreign currency IDRs of Gerdau's Brazilian operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Acominas, and its national scale rating of 'AA+(bra)'. Fitch has also placed on Rating Watch Negative the 'BBB' IDR of Brazilian Steel Importer Ltd., and the following secured export note (SENs) issuances: --Series 2003-A 'BBB'; --Series 2004-A 'BBB'; The placement of the ratings on Negative Watch follows the announcement by Gerdau Ameristeel Corporation that it has reached an agreement to acquire Chaparral Steel Company in a transaction that values the equity of Chaparral at $4.2 billion. Gerdau Ameristeel, whose controlling shareholder is Gerdau S.A, has stated that it intends to fund the acquisition with a mix of debt and equity. Positively, the transaction would strengthen Gerdau Ameristeel's business position in the competitive North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. steel market. The Negative Watch reflects the uncertainty of the ultimate financing structure that will be pursued by Gerdau Ameristeel. It also reflects concern that Gerdau S.A. may need to raise a material amount of debt, which would likely be guaranteed by its main Brazilian operating subsidiaries, to fund its portion of a future equity increase by Gerdau Ameristeel. At the end of 2006, Gerdau S.A. had $4.7 billion of total debt and $3.0 billion of cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . Gerdau's consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for 2006 was $2.6 billion. Headquartered in Porto Alegre, Brazil, Gerdau S.A. is a holding company for the group's steel production facilities in North and South America and Europe. The Gerdau companies operate minimill min·i·mill n. A small mill or plant, especially a steel mill that uses electric furnaces to produce steel from scrap. and integrated-steel facilities in Brazil, Argentina, Chile, Colombia, Peru, Uruguay, the United States, Canada, and Spain and have a crude steel production capacity of 19.2 million metric tons in 2006. Gerdau owns 89.3% of its Brazilian operating companies, which consist primarily of Acominas and Acos Longos and have a combined production capacity of about 9.3 million tons of crude steel. In North America, Gerdau owns 66.8% of Ameristeel, which ranks as the second-largest minimill steel producer with an annual manufacturing capacity of 9.0 million short tons of mill finished steel products from a network of 17 minimills, including the 50%-owned Gallatin Steel joint-venture. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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