OREANDA-NEWS. On 11 June 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaBB to registered coupon bonds (series A) issued by Ivano-Frankivsk Oblast-based Avangard CJSC (`issuer` or `company`). The amount of the issue is UAH200m, with 5-year original maturity. The company`s principal activity is production of hen`s eggs. In the course of analysis Credit-Rating considered issuer`s financial statements for 2004-2007 and its other inside information.

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

Issuer`s strong market positions, which takes a. 17% of the market in 5 oblasts of western Ukraine.

The issuer`s net sales increased 3x in the past 3 years to UAH94.3m; the EBITDA (exclusive of financial incomes) grew 2.4x to UAH44.1m; the equity rose 4x to UAH115.2m, with the EBITDA profitability added 24.6. p.p. to 46.7%.

The issuer is incorporated with a legally informal group of companies, which empowers the company to secure its full production cycle and the produce sales.

Factors constraining the credit rating

The issuer`s debt burden is expected to increase had the bond issue is placed in full.

Risks imposed by redistribution of funds within the group of companies.

Issuer`s vulnerability to changes in state agricultural policy coupled with seasonality in demand and growing competition on in egg segment, where there exist risks of overproduction and excess in supply.