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20.03.2006
"uaBB" credit rating assigned to upcoming bond issue of "Luganskiy gofrotarniy kombinat" Ltd
Today independent rating agency Credit-Rating announced the upgrade of long-term credit rating of registered interest-bearing bond issue by "Luganskiy gofrotarniy kombinat" Ltd in the amount of UAH 3 million with a circulation period of 3 years from "uaB+" to "uaBB" . Main trend of the companys activity is corrugated cardboard and packaging production. For the rating revision Credit-Rating agency used financial reports of Lugansky Corrugated Integrated Works, Ltd for the 4 th quarter and the whole of 2005 as well as other inside information provided by the company.
Debt obligations of "uaBB" rating are the least susceptible to insolvency risks on the debt principle or interests among debt obligations of speculative level. Yet the borrower can have difficulties with timely and complete fulfillment of this debt obligation in the conditions of Ukrainian financial market, should any adverse changes in commercial, financial and economic conditions take place, though in the nearest future there is only a slight possibility of such failure.
Considerations for upgrade of the credit rating of bond issue by "Luganskiy gofrotarniy kombinat" Ltd were the following: the companys performance showings improved in 2005: volume of assets grew from UAH 7 521.3 thousand to 15 037.3 thousand, produce sales volumes from UAH 7 243.6 thousand to 20 725.6 thousand, annual net income UAH 1 888.0 thousand. Introduction of modern corrugated cardboard and packaging producing equipment resulted in 5.2 percentage points reduction of production prime cost in 2005. The index of covering EBITDA of all summary expenses for service and redemption of existing debt obligations was 1.9 times in 2005, it is expected to be 1.6 times in 2006. At the same time the company retains high dependency on borrowed finances (financial independence coefficient 13.4% as of 12.31.2005), practically all the companys property is mortgaged, raw material supplies are not very diversified.
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