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30.05.2008
Credit-Rating assigns EKO LLC`s upcoming bond issue uaBB+
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it assigned a long-term credit rating of uaBB+ (uaBB plus) to registered coupon bonds (series A, B) to be issued by Kiev-based EKO LLC (`issuer` or `company`). The amount of the issue is UAH100m, with 5-year original maturity. The company`s principal activity is food retailing via EKO-market outlet chain. In the course of analysis Credit-Rating considered issuer`s financial statements for 2002-2007 as well as its other inside information.
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. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).
Factors maintaining the credit rating
- The growth rates of sales via EKO-market chain have been rapidly growing over the issuer`s period of operation, in fact 2007 saw 79% gain in net incomes (to UAH744.4m) as compared with the previous period.
- The issuer`s outlet chain is constantly developing, and as of Apr. 18, 2008 comprised 46 outlets in different Ukraine`s regions.
- Issuer`s strong market positions in certain regions (Zhytomyr, Sumy, Vinnytsya, Rivne etc.)
- The retailing has been rapidly growing over the past few years, and such trend is expected to be further retained.
Factors constraining the credit rating
- Issuer`s low profitability indicators (the EBITDA profitability amounted to 4% in 2007).
- Issuer`s significant debt burden, specifically in 2007 the net debt 5x exceeded the EBITDA; the net debt, including the upcoming bond issue exceeds 9x the issuer`s equity as of Jan. 1, 2008.
- Issuer`s ambitious expansion plans accompanied by its anticipated significant investment activity.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and Communication Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
