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20.11.2007
Credit-Rating: AGRO`s bond issue assigned uaBB
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today assigned a long-term credit rating of uaBB to UAH50m 3-year registered coupon bonds (A series) issued by Lugansk-based AGRO Private Company (`Issuer` or `company`). The company`s primary activity is crop production, cattle breeding and milk processing. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2002-2006 and 1H2007 as well as other inside information furnished by the company.
An obligor or a debt liability with uaBB credit rating is characterized with the LOWER THAN SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is strongly affected by adverse changes in commercial, financial and economic conditions.
Factors maintaining the credit rating
- The Issuer`s key figures have been growing over 2002-2006, specifically the Issuer`s net sales rose to UAH62.5m from UAH15.7m with the land area rented increased to 95.6K ha from 10K ha.
- Both the Issuer and AGROTON CJSC, which controlling sock is owned by the Issuer, operate production facilities, which enable the Issuer to provide the full production cycle, to increase the production differentiation and to decrease Issuer`s dependency upon market conditions.
- The Issuer enjoys a high-efficient management, one of which goals is maintenance of employees` high proficiency as well as upgrade and development of production facilities.
Factors constraining the credit rating
- The Issuer`s consolidated debt liabilities including those of UAH50m on the bond issue will exceed 7.3x Issuer`s equity of UAH32.2m as of Jul.1, 2007, if the issue is placed in full.
- The Issuer`s cash flows remained negative during 2005-2006 being accompanied by growth in attracted funds.
- Almost all Issuer`s property is deposited under bank loans.
- The Issuer`s activities is seasonal and dependant on crop capacity and weather conditions and is vulnerable to state support to the agro-industrial complex and to competition in the market, which has been heated up by Russian embargo on milk and meat product export.
Information on all credit ratings assigned in accordance with the National Scale may be found in REUTERS, BLOOMBERG and FTN MONITOR information systems.
For more information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
