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17.07.2008
Credit-Rating assigns Kovelmoloko OJSC`s upcoming bond issue uaBBB-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it assigned a long-term credit rating of uaBBB- (uaBBB minus) to registered coupon bonds (series A) to be issued by Volyn Oblast-based Kovelmoloko OJSC (`issuer` or `company`). The amount of the issue is to be UAH50m, with 3-year original maturity. The company`s principal activity is milk processing and production of dairy goods. In the course of analysis Credit-Rating considered issuer`s financial statements for 2003-2007 and 1Q2008 as well as its other inside information.
An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is 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
- Issuer`s strong positions on the domestic dairy market, which produce is sold under Optimal, Gurmanika and Molochnaya Semya trademarks.
- Western Dairy Group LLC, which is the issuer`s primary distributor, act as a company`s guarantor (as of Dec. 31, 2007 the amount of its assets is UAH492.3m, the amount of its sales in 2007 is UAH779.1m, with the net profit being UAH28m).
- Growth in issuer`s key performance indicators over 2003-2007, in fact the net sales incomes rose 4.7x to UAH266.9m and the EBITDA increased 1.8x to UAH17.3m
- Stable demand for dairy products.
Factors constraining the credit rating
- Issuer`s significant debt burden (as at FY ended March 31, 2008, the company`s consolidated debt exceeded 5x its EBITDA) and anticipated growth in issuer`s debt burden in the course of implementation of the planned investment projects.
- A significant part of issuer`s property is pledged as security for banking loans.
- The issuer does not have own sources for raw materials supply.
- Seasonality in production process, and issuer` vulnerability to state support of the agricultural sector and to competition in the dairy segment.
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
