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21.11.2008
Credit-Rating downgrades Drogobych Rock Bit Works OJSC and its bonds to uaBBB-
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that it downgraded to uaBBB- (uaBBB minus) from uaBBB the long-term credit ratings assigned to Lviv Oblast-based Drogobych Rock Bit Works OJSC (`issuer` or `company`) and to its UAH50m 3-year issue of registered coupon bonds (series A and B). The outlooks on the ratings are negative. The company`s principal activity is manufacturing of drilling equipment. To revise the rating Credit-Rating considered issuer`s financial statements for 2H2008 and 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).
Negative outlook indicates that there is a possibility to downgrade the rating in the course of the year, on condition that negative tendencies are retained and current risks are realized.
Factors maintaining the credit rating
- The Issuer is associated with Russia-domiciled Volgaburmash OJSC group of companies, which incorporates all large drilling equipment manufacturers in CIS.
- Issuer`s stable profitability indicators, in fact the issuer`s EBITDA have remained over 15% during 2005-2007 and 1H2008.
Factors constraining the credit rating
- Issuer`s dependency upon the group and risks of funds redistribution within the group neglecting issuer`s interests, and delay in repayment of debt obligations by Volgaburmash OJSC.
- Issuer`s vulnerability to fluctuations in metal prices, to regulatory policy in export operations and to changes in currency exchange rates, which is associated with issuer`s significant export volumes.
- The ratio of issuer`s net debt to EBITDA is 3.6x as of June 30, 2008 (according to the results of the financial year), and it has tended to grow in the past few years.
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 analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.ua
