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24.07.2007
Upcoming bond issue by Verlen LLC assigned uaCC+ credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaCC+ (uaCC plus) long-term credit rating to UAH43.1m 10-year issue of registered coupon bonds (A, B series) by Kiev-based Verlen LLC (Issuer or company). The company's primary activity is investment and construction. Today the company implements a developer project on organizing the construction in the city of Kiev. In the course of analysis Credit-Rating considered Issuer's financial statements for 2004-2006 and 1Q2007 as well as other inside information furnished by the company.
A credit rating of uaCC is a speculative grade rating, indicating a debt liability with a HIGH POSSIBILITY OF NON-PAYMENT on obligations in the Ukrainian financial market environment. The plus (+) or minus (-) modifier denotes ratings relative status within major categories.
Factors maintaining the credit rating:
- The Issuer is involved in organizing and financing the construction in the city of Kiev, where real estate prices and demand have been growing over the past few years.
Factors constraining the credit rating:
- The planned issue size of UAH43.1m exceeds Issuer's asset balance of UAH0.8m as of March 31, 2007;
- Issuer's equity have remained negative during 2004-2006 and 1Q2007, in fact Issuer's equity amounted to UAH(-)515.4K called forth by company's detrimental performance.
- The characteristics of the issue, namely the original maturity of 10 years, with the 8% coupon paid once in three years, do not correlate with the characteristics peculiar to coupon bond issues.
- Volatility in legislation and taxation on operations associated with construction and with attraction of funding.
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
