print
21.03.2006
"uaBBB" credit rating assigned to upcoming bond issue of Lozovskiy Forging and Mechanical Plant
Today independent rating agency Credit-Rating announced the granting of a long-term "uaBBB" credit rating to the registered interest-bearing bond issue by CJSC Lozovskiy Forging and Mechanical Plant in the amount of UAH 80 million (A series – UAH 50 million, for the period of 5.5 years, B series – UAH 30 million, 7.5 years) with additional guarantee. Main trend of the company’s activity is hot forging, production of tractor sets, axles for building and loading machinery.
Factors supporting the credit rating’s level:
- CJSC Lozovskiy Forging and Mechanical Plant was created on the basis of Lozovskiy Forging and Mechanical Plant and it owns unique equipment facilities;
- The issuer takes 60% of Ukrainian and Russian market of crank-shaft production and is one of the largest CIS producers of driving axles for buses and road-building load-transfer devices, tractor sets and spare parts for railway transport;
- The Issuer’s membership in U.P.E.C group allows optimizing commercial activity and guarantees support from the group if needed;
- Planned guarantee of JSC U.P.E.C, balance currency of which as of 01.01.2006 was UAH 93.3 million, owned capital volume – UAH 78.2 million, net income volume – UAH 4.3 million. Contracts of guarantee are to be made between Issuer and Guarantor, and Guarantor and bond buyers;
- Large-scale plans of production development of the Issuer are supported by portfolio of Ukrainian and foreign partners.
Factors restricting the credit rating’s level:
- Short period of the Issuer’s operation complicates the forecast of its activity for the whole period of bond circulation: the enterprise was registered in 2003 and started production in the 4th quarter 2004 on a give-and-take basis, and since Nov. 2005 – on own production facilities;
- There is a possible risk of redistribution of facilities and cash flows inside U.P.E.C group without taking into consideration the Issuer’s interests;
- As of 01.01.2006 the Issuer’s financial independence coefficient is 0.13, debt to owned capital ratio is almost 7 times;
- Volume of bond issue by CJSC Lozovskiy Forging and Machinery Plant is almost 17 times more than its owned capital volume as of 01.01.2006 (UAH 80 million);
- The plant’s susceptibility to price changes in raw materials and energy sources and trade restrictions on the part of countries importing produce and changes of currency rates;
- Registered trade mark LKMZ is used both by the Issuer and OJSC Lozovskiy Forging and Mechanical Plant.
For more detailed information, please contact
us.
Kyiv (+38044 490 25 50, fax +38044 490 25 54)
