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28.08.2007
Bond issue by Brovar Ltd assigned uaCCC credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine, has today announced the assignment of uaCCC long-term credit rating to UAH65m 9 year issue of registered interest bonds (A series) by Brovar Ltd LLC (`Issuer` or `Company`). The company`s principal business is investment and construction. At present, the company carries out a project for the construction of residential area of low-rise apartment buildings in the urban village of Vorzel, Kiev Oblast. In the course of analysis, Credit-Rating considered the Issuer`s financial statements for 2002-2006 and 1Q2007 as well as other inside information furnished by the company
An obligor or a debt liability with uaCCC credit rating is characterized with the VERY LOW creditworthiness as compared to other Ukrainian obligors or debt liabilities. There is a default possibility.
Factors maintaining a credit rating:
- The Issuer is involved in residential construction in the suburb of Kiev (urban village of Vorzel), where the prices and demand have been growing over the past few years together with the increasing demand in the capital.
Factors constraining a credit rating:
- As of March 31, 2007, the planned bond issue (UAH 65m) significantly exceeded the Issuer`s assets (UAH 0.4m);
- The Issuer`s unprofitable activities during 2006 and 1Q2007, as of March 31, 2007 total uncovered loss amounted to UAH (-) 148 400;
- Parameters of the planned bond issue (original maturity is 9 years and interest rate of 9% is paid together with the bonds redemption) do not meet the typical parameters of interest bond issue;
- Appearance of positive cash flows before the bond redemption depends on the success in carrying out the investment and construction taking into account that the Issuer has no experience in conduction of such projects;
- 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
