Fitch Downgrades Sidetur's IDRs to 'CCC'; On Rating Watch Negative

CHICAGO & CARACAS, Venezuela--()--Fitch Ratings has downgraded the following ratings of Sidururgica del Turbio S.A. (Sidetur) and has placed them on Rating Watch Negative as indicated:

Sidetur S.A.

--Foreign currency Long-Term Issuer Default Rating (IDR) to 'CCC'; Watch Negative from 'B-';

--Local currency Long-Term IDR to 'CCC'; Watch Negative from 'B-';

--National scale rating to 'CCC(ven)' from 'BB+(ven)';

--National short-term rating to 'C(ven)' from 'F2(ven)'.

Sidetur Finance B.V.

--USD100 million unsecured notes due 2016 issued by Sidetur Finance B.V., a wholly owned subsidiary of Sidetur to 'CCC/RR4'; Watch Negative from 'B-/ RR4'.

This rating action follows the government of the Bolivian Republic of Venezuela's takeover of Sidetur's operations and management, as set out in Sidetur's press release on Oct. 30, 2012. The downgrade of Sidetur's ratings to 'CCC'; Watch Negative and 'CCC(ven)' reflects the real possibility of default and high uncertainty surrounding the uninterrupted payment to the company's creditors.

The 'CCC/RR4'; Watch Negative rating for Sidetur Finance B.V.'s unsecured notes due 2016 reflects Fitch's expectation of average recoveries for the note holders, given the current uncertainty and lack of information. As of June 30, 2012, approximately USD78 million was outstanding on notes. The Watch Negative reflects that the next coupon payment for Sidetur Finance B.V.'s unsecured notes is due on Jan. 20, 2013. Information from the new management team at Sidetur has not been received regarding if this payment will be met.

Sidetur's assets are under the control of the Ministerio del Poder Popular de Industrias and a new management team is in place. The government of the Bolivian Republic of Venezuela has stated previously that it will honor the outstanding debt of expropriated companies. Precedents of government payments to previously private companies exist, such as the payments made to Cemex and Sidor for their expropriated assets in Venezuela.

Contact:

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug.8, 2012);

--'National Ratings - Methodology Update' (Jan.19, 2011);

--'Evaluating Corporate Governance' (Dec.13, 2011);

--'Parent and Subsidiary Rating Linkage' (Aug.8, 2012)

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

National Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885

Evaluating Corporate Governance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=657143

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

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Contacts

Fitch Ratings
Primary Analyst
Jay Djemal, +1 312-368-3134
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
o
Secondary Analyst
Julio Ugueto, +58 212-286-3232 ext.109
Associate Director
or
Committee Chairperson
Dan Kastholm, CFA, +1 312-368-2070
Managing Director
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Jay Djemal, +1 312-368-3134
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
o
Secondary Analyst
Julio Ugueto, +58 212-286-3232 ext.109
Associate Director
or
Committee Chairperson
Dan Kastholm, CFA, +1 312-368-2070
Managing Director
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com