OREANDA-NEWS. August 2, 2012. HMS Group (LSE: HMSG) today announces that Standard & Poor’s Ratings Services lowered the long-term corporate rating of the company from “BB-“ to “B+” with “Negative” outlook, following its acquisitions of the largest compressor producer in Russia,  Kazankompessormash (KKM), and a German centrifugal pump producer, Apollo Goessnitz GmbH (Apollo).  Also, S&P downgraded HMS’ Rub 3 bn unsecured notes to “B” from “B+”.

According to S&P, the downgrade follows HMS’ acquisitions, which were fully funded by debt. Though HMS Group hasn’t broken its internal 2.5x Net debt-to-EBITDA ratio, the agency expects the company’s “credit metrics to deteriorate in 2012.” Also, the rating action reflects the tightening of HMS’ liquidity position since S&P believes that the company will depend on the refinancing of part of its short-term debt facilities in coming months to regain an adequate liquidity cushion.

However, the agency views “the acquisitions as neutral for the business risk profile”, where “KKM seems to represent a good strategic fit as it will complement HMS’ product offering, especially for gas applications, and potentially yield synergies over time.”

S&P underlines, that it would likely to revise the outlook to “Stable” if HMS refinances and extends its 2012-2013 maturities by the end of 2012 while maintaining operating performance and working capital levels in line with their current expectations.

HMS Group is the leading pump manufacturer and provider of flow control solutions and related services to the oil and gas, nuclear and thermal power generation and water utilities sectors in Russia and the CIS. The HMS Group’s products are mission-critical elements of projects across a diverse range of industries. It has participated in a number of large-scale infrastructure projects in Russia, including providing pumps and modular equipment to the Vankor oil field and pumping stations on recent trunk pipelines projects linking Russia’s core oil producing areas to export ports on the Pacific Ocean and Baltic Sea. The Group reported revenues of RUB 7.3 billion, adjusted EBITDA of RUB 1.4 billion and profit of RUB 485 million for the 3 months ended March 31, 2012. The HMS Group’s global depositary receipts (“GDRs”) are listed under the symbol “HMSG” on the London Stock Exchange.