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18.10.2006
The planned bond issue of the LLC "West Tobacco Group" assigned uaBB- (uaBB minus) credit rating
The independent «Credit Rating» agency has today announced the assignment of uaBB- (uaBB minus) credit rating to the issue of registered interest-bearing bonds (A series) by the Lviv-based LLC «West Tobacco Group» for the amount of UAH 5 mln. with the 3 year maturity term. The wholesale tobacco products trade is the main company’s activity. During the analysis the «Credit Rating» agency used full Issuer’s 2005 – 1H 2006 financial reports, as well as other inside information, furnished by the company.
The debt liabilities rated uaBB are the least affected by the risk of nonpayment of the principal or interest within the speculative grade. The obligor, however, may face difficulties connected with full and timely payment in the Ukrainian financial market environment in the event of adverse changes in business, financial and economic conditions, though the possibility of nonpayment is low in the near future. The ‘minus’ denotes the rating’s relative status within major categories.
Factors supporting the credit rating level
- The Issuer was established on the basis of companies with over a 10-year experience on the tobacco market of the region and is the biggest tobacco distributor in western Ukraine.
- The company has high turnover indices (according to the 1H 2006 the stock turnover ratio accounted for 18 days, the accounts receivable turnover accounted for 16 days), and constantly maintain the sufficient liquidity level (the momentary liquidity has exceeded 0.2 for the overall period of company’s activity).
- The Issuer reduces the operational risks at the expense of a significant regional and customer sales diversification and extends the assortment of goods, introducing into it the mobile operators’ pre-paid cards in line with the tobacco products.
Factors restricting the credit rating level
- The size of the issuance planned 10x exceeds the size of the statutory capital, 6x of the equity capital; the low securitization of the company’s liabilities with the non-operating assets.
- Low indices of company’s profitability and financial stability, in fact, the Issuer’s profitability of activity was 0.09% for 1H 2006, the financial independence ratio was 0.02
- A significant impact of the governmental regulations on the Ukraine’s tobacco industry.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale can be found in the REUTERS and BLOOMBERG information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
