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22.08.2007
Upcoming bond issue by Western Automobile Company LLC assigned uaB- credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine, has today announced the assignment of uaB- long-term credit rating to UAH 71.4m 8-year issue of registered housing bonds (A-D series) by the Chernovtsy-based Western Automobile Company LLC (`Issuer` or `Company`). The company`s principal business is the wholesale and retail sales, management, sale and rent of the real estate, and rendering of advisory services for commercial activities and management. At present, the company carries out a project for the construction of multi-storey apartment buildings in the city of Chernovtsy. 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.
An obligor or a debt liability with uaB credit rating is characterized with the LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is extremely susceptible to adverse changes in commercial, financial and economic conditions. A plus + and a minus - signs indicate intermediary categories (grades) compared to the standard categories (grades).
Factors maintaining a credit rating:
- The housing bonds will be redeemed by giving residential and business premises in the residential and business complex located at 43B, Krasnoarmeyskaya Str., Chernovtsy, to their owners. Capital investments for the amount of UAH 4m or 4% of the estimated project costs were made by the beginning of July 2007;
- The Issuer is involved in financing and construction of the residential and commercial real estate in the city of Chernovtsy, where prices and demand have been growing over the past few years.
Factors constraining a credit rating:
- The Issuer has no experience both in carrying out investment and construction projects and in the redemption of housing bonds by giving premises to their owners;
- The Issuer depends on the financial liabilities which exceeded the balance sheet total by 70% as of March 31, 2007, and it has no other sources of revenues at the same time.
- The upcoming housing bond issue (UAH 71.4m) exceeded the Issuer`s assets (UAH 6.5m) by more than 10 times as of March 31, 2007;
- The Issuer`s equity had a negative value during 2004 2006 and 1Q2007;
- Instability of legislation and tax environment controlling both the construction industry and project financing.
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
