Fitch places Turkey’s Tupras on Rating Watch Negative

Published January 18th, 2004 - 02:00 GMT

Fitch Ratings has placed Turkish oil refiner Tupras' BB+ Senior Unsecured local currency rating and B foreign currency ratings on Rating Watch Negative.  


At the same time, the rating agency placed Russian oil company Tatneft's B Senior Unsecured rating on Rating Watch Negative. The rating actions follow a partial clarification of the link between Tatneft and Efremov Kautschuk (EK), one of the bidding partners for a 65.76 percent stake in Tupras.  


Fitch has learned that EK is in fact acting as an agent on behalf of Tatneft in the bid, reported a press release. As such, upon successful conclusion of the privatization, an ownership stake in Tupras would effectively be transferred to Tatneft. The exact nature of funding for the transaction needs additional clarification, but Tatneft has indicated to Fitch that it may be required to raise additional finance.  


A resolution to the Rating Watch Negative on Tatneft, either a one-notch downgrade or a rating affirmation, will come after further disclosure of the exact financing arrangement for the acquisition by Tatneft and its agent (EK), as well as the impact an ownership stake in Tupras is likely to have on Tatneft's business profile and operating strategy.  


While Fitch said that Tupras, as a privately owned company, will benefit from greater business and financial flexibility, the imminent uncertainties over future corporate and financial strategies and weaker credit profile of Tatneft compared with Tupras have led to the Rating Watch Negative for Tupras.  


The final decision on the privatisation bid is expected to be taken by the Privatisation High Council within a few weeks. Fitch said it will resolve the Rating Watch Negative on Tupras, by a notch downgrade or ratings affirmation, after the privatization is finalized and uncertainties resolved. — ( 



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