S&P Places Steel Dynamics (STLD) on CreditWatch Negative Following Severstal Columbus M&A News

Standard & Poor's Ratings Services said it placed its ratings, including its 'BB+' corporate credit rating, on Fort Wayne, Ind.-based Steel Dynamics Inc. (Nasdaq: STLD) on CreditWatch with negative implications.

The CreditWatch negative listing follows Steel Dynamics' announcement that it will acquire Severstal Columbus, a steel production mini-mill, for $1.625 billion.

We estimate that the transaction could weaken Steel Dynamics' credit measures over at least the next year, with pro forma leverage, as measured by debt to EBITDA, exceeding our previously expected 2014 year-end leverage of about 3x.

"We will resolve the CreditWatch listing following our review of the financing details of the pending transaction and implications for Steel Dynamic's business and financial risk profiles," said Standard & Poor's credit analyst Funmi Afonja. "Upon completion of our review, we could leave the ratings unchanged or lower them. Based on preliminary information, we believe that if we were to lower the ratings, the downgrade would not exceed one notch," she added.

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