Fitch ups Corus outlook to positive

Fitch Ratings said it changed Corus Group plc's outlook to positive from stable following the company's announcement of its 2005 results and plan to dispose its aluminum business for €826 million.

Fitch also affirmed the company's BB- issuer default rating, B+ €800 million 7½% senior notes, B+ €307 million 3% convertible bonds, B+ €20 million 5 3/8% guaranteed bonds and B+ £200 million 6¾% guaranteed bonds.

The ratings reflect Corus' leading market position as the third-largest steel producer in Europe by volume and the continued turnaround in the company's financial performance since 2003, the agency said. Corus reported net revenues of £10.14 billion and EBITDA of £1.027 billion in 2005. With gross debt of £1.692 billion excluding pensions liabilities and cash of £871 million, total leverage was 1.6x and net leverage was 0.8x at the end of 2005.

Corus has stated that it does not intend to use the proceeds of the aluminum disposal to reduce debt, but may use a portion of the funds for investment in order to further strengthen its business profile. Fitch said it would view positively the reinvestment of the proceeds in the core business, although a return of substantial proceeds to shareholders in the form of a dividend could limit the rating's upside potential.

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