OREANDA-NEWS. On 7 February 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine assigned a long-term credit rating of uaBB to UAH12.5m 4-year registered coupon bonds to be issued by Kiev-based BMB Compound LLC (`Issuer` or `company`). The company`s principal activity is production of confectionery and chocolate glazes for bakery, confection and dairy. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2002-2006 and 9M2007 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.

Factors maintaining the credit rating
The Issuer is one of the leading national chocolate and confection glaze producers.
The Issuer is incorporated with Bears Food Ingredients, which provides the Issuer with access to raw materials and with technological maintenance.
Sufficient Issuer`s performance: the EBITDA made up 11.6 per cent recorded in 9M2007; the Issuer`s equity to assets ratio accounted for 0.42 as of Oct. 1, 2007, albeit both these indicators have remained volatile.

Factors constraining the credit rating

High sales concentrations on principal buyers, specifically 50 per cent of 9M2007 sales account for Issuer`s 2 biggest customers.

The Issuer`s debt burden is expected to increase to UAH21.2m including the bond issue, which exceeds 2x the Issuer`s equity of UAH10.3m (as of Oct. 1, 2007); the annual coupon payments of UAH2m exceed 2006 EBITDA of UAH1.9m.

The demand for ice-cream glaze has seasonal nature with this product accounting for 40 per cent of Issuer`s overall sales in 2007.

Risks imposed by redistribution of funds within the group of companies neglecting Issuer`s interests.

The redemption of the bond issue is contingent upon successful implementation of the investment project aimed at construction of a glaze factory located in the borough of Kalynivka.