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05.06.2007
Upcoming bond issue by Sumykhimprom assigned uaBBB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB- (uaBBB minus) long-term credit rating to the upcoming issue of registered coupon unsecured bonds (A series) by Sumy-based Sumykhimprom OJSC (`Issuer` or `company`) for the amount of UAH50m with the 3-year original maturity. The main company`s activity is production of chemical products, fertilizers, colorants, plastics, enamels and paints. In the course of analysis Credit-Rating used Issuer`s financial statements for 2003-2006 as well as other inside information furnished by the company.
The uaBBB issue rating reflects obligor`s adequate capacity to timely and in full meet its commitments on the obligations in the Ukrainian financial market environment. There is, though, a higher vulnerability to the effect of adverse changes in business, financial and economic conditions as compared to obligors with higher ratings. The + and - modifiers denote rating`s relative status within major categories.
Factors maintaining the credit rating
- The Issuer is a strategic company for Ukraine`s economy and national security, being one of the biggest CIS (Commonwealth of Independent States) manufacturers of chemical fertilizers, colouring agents, fodder phosphates and coagulants. The company`s specific gravity in national production of titanium dioxide amounts to 35%, of sulfuric acid to 30%, of ammoniated superphosphate to 100%, of complex chemical fertilizers to 50%.
- Issuer`s asset balance has grown 23% to UAH762.1m during 2004-2006; according to 2003-2006 totals Issuer`s sales have grown 75% to UAH579.5m with the EBITDA having grown 46% to UAH46.5m
Factors constraining the credit rating
- Unstable Issuer`s performance during 2003-2006, among the factors causing that was company`s dependency upon situation on foreign markets, the assets` writing-off and their additional estimations, and by losses incurred under company`s nonspecialized activity.
- According to 2 past years` totals Issuer`s profitability has fallen due to rise in gas price and to disproportional growth in general and financial expenses.
- High deterioration of Issuer`s main funds averagely amounting to 53%, which requires significant investments in their modernization and maintenance, and if the company`s own funds remain insufficient, it will be more dependant upon borrowed funds. The debt to equity ratio has grown to 36% as of Dec. 31, 2006 from 24% as of Dec. 31, 2003.
- Uncertainty in company owner`s change expected in the current year with the company`s 100% shares being to be sold herewith.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS, BLOOMBERG and FTN MONITOR information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
