OREANDA-NEWS. On 28 May 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaBBB- (uaBBB minus) to registered coupon bonds (series B) issued by Cherkassy Oblast-based Ukragro NPK CJSC (`issuer` or `company`). The amount of the issue is UAH75m, with 5-year original maturity. The company`s principal activity is production and sale of complex mineral fertilizers. In the course of analysis Credit-Rating considered issuer`s financial statements for 2003-2007 and 1Q2008, as well as its other inside information.

An obligor or a debt liability with uaBBB credit rating is characterized with the SUFFICIENT creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is affected by adverse changes in commercial, financial and economic conditions. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Factors maintaining the credit rating

Issuer`s strong market position, which is among Ukraine`s 5 largest producers of pomace mixes, which consumption has been constantly growing over the past few years.

The issuer`s sales grew 12x to UAH316.5m in the past 5 years; EBITDA rose 28x to UAH27.8m; the equity increased to UAH52m from UAH3.3m; the EBITDA profitability grew by 7.3 p.p. to 8.8%.

The issuer is incorporated with Linas Agro group of companies, which is one of the leading processing and trading companies operating in the segment of agricultural produce in Baltic states.

Factors constraining the credit rating

The issuer`s debt burden increased in 2004-2007 (the ratio of financial liabilities to the shareholders equity advanced to 0.56 as of Dec. 31, 2007 from 0.37 as of Dec. 31, 2003), and is expected to grow further with the bonds issued.

Growing competition in the market of mineral fertilizers, specifically in the segment of pomace mixes.

Issuer`s vulnerability to changes in state agricultural policy and seasonality in demand.