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23.07.2007
Upcoming bond issue by Cultural-Business Centre LLC assigned uaB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaB- (uaB minus) long-term credit rating to the upcoming UAH104.8m 3.5 year issue of registered housing bonds (C,D,E series) by Dnepropetrovsk-based Cultural-Business Centre LLC (Issuer or company). The company's principal activity is investment and construction. Today the company constructs a residential complex in the urban village of Koreiz (the Autonomous Republic of Crimea). In the course of analysis Credit-Rating considered Issuer's financial statements for 2003-2006 and 1Q2007 as well as other inside information furnished by the company.
A credit rating of uaB is a speculative grade rating, indicating a debt liability that has a HIGHER DEFAULT POSSIBILITY on the payment of principal and interest than a uaBB rating. This rating indicates that adverse changes in the business, financial or economic conditions in the Ukrainian financial market environment may negatively affect the obligors capacity and willingness to meet in full its commitments on the given debt liability. The plus (+) or minus (-) modifier denotes ratings relative status within major categories.
Factors maintaining the credit rating:
- The planned issue is to be redeemed by residential premises of the complexs 2 nd turn in 64-66, Yuzhnaya Str, the urban village of Koreiz. As of Jun.1, 2007 the turn's construction is currently on the initial stage (with the ground works being conducted). The construction readiness of the 1 st turn is 30% as of May 1, 2007;
- The Issuer is involved in financing the residential construction on the southern coast of Crimea, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating:
- The Issuer does not have experience in investment and construction projects, neither in bonds redemption;
- Issuer's consolidated liabilities on 3 (upcoming one included) issues are to advance to UAH135.3m, being 18.5x higher than the Issuers equity as of Mar. 31, 2007;
- Low-efficient Issuer's performance, including that associated with operations on securities, which is not a companys primary activity;
- Volatility in legislation and taxation on operations associated with construction and with cash attraction.
Information on all the credit ratings assigned in accordance with the Ukrainian National Scale may be found in 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
