OREANDA-NEWS. Credit-Rating, a nationally recognized credit rating agency in Ukraine has announced  assignment of uaBB- (uaBB minus) long-term credit rating to UAH 5m 3-year issue of registered coupon bonds (B series) by Lvov-based West-Tobacco-Group LLC. The company`s principal activity is trade in tobacco products. In the course of analysis Credit-Rating considered the issuer`s financial statements for 2005-2006 and 1H2007, as well as other inside information furnished by the company.

An obligor or a debt liability with uaBB credit rating is characterized with 'the lower than sufficient' creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is strongly affected by adverse changes in commercial, financial and economic conditions. The plus (+) or minus (-) modifier denotes rating`s relative status within major categories.

The issuer is a wholesale distributor of tobacco products in western Ukraine, that was established on the basis of companies with over 10-year experience in this market niche. Issuer`s net income rose 11.8% to UAH308.5m in 1H2007 as compared to the previous year, with the net revenue growing 5x to UAH1,146.9K (UAH381.6K in 2006).

At the same time, issuer`s consolidated liabilities on bank loans and bonds (including the scheduled placement of B series) 15.9-fold exceed issuer`s equity as of July 1, 2007. The issuer heavily depends upon producers, which may unilaterally revise the cooperation conditions, being few in number, with CJSC Philipp Morris Ukraine providing up to 45% of supply. At, that, te tobacco industry of Ukraine is highly vulnerable to state regulation.