Steel Dynamics, Inc. -- Moody's says SDI's acquisition of Severstal's Columbus credit negative

New York, July 21, 2014 -- Moody's Investors Service comments that Steel Dynamics, Inc's (SDI) $1.63 billion acquisition of Severstal Columbus, LLC from OAO Severstal (Ba1 corporate family rating) is credit negative, although it has no impact on SDI's Ba1 corporate family rating (CFR) at this time. The company indicates that it intends to fund the transaction with a combination of cash on hand ($343 million at March 31, 2014) and debt. SDI has entered into a $1 billion committed bridge facility. In addition to the company's cash position, liquidity is supported by a $1.1 billion asset-based senior secured revolving credit facility expiring in September 2016. The increase in leverage resulting from the transaction will weaken SDI's debt protection metrics and lengthen the time frame by which the company can evidence metrics more appropriate for its rating.

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