OREANDA-NEWS  On 28 October Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaBB from uaBBB+ (uaBBB plus) the long-term credit rating assigned to registered coupon bonds (B series) issued by Cherkassy-based Cherkassy Battery Farm LLC (`issuer` or `company`) for the amount of UAH30m with original maturity till Nov. 9, 2009. The rating`s outlook has been changed to negative. Besides the agency suspended the long-term credit rating assigned to registered coupon bonds (A series) for the amount of UAH15m due to the redemption of the bonds issue. The company`s principal activity is production and supply of broiler meat. To revise the rating Credit-Rating considered issuer`s financial statements as at end-1H2008 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.

Negative outlook indicates that there is a possibility to downgrade the rating in the course of the year, on condition that negative tendencies are retained and current risks are realized.

Factors maintaining the credit rating

The Issuer`s volumes of output have advanced over the past few years, specifically by 18.7% in 1H2008 as compared to the similar period in 2007.

Moderate issuer`s debt burden: according to the indicators of the financial year ended Jun. 30, 2008, the ratio of issuer`s net debt to the EBITDA made up 1.72.

Factors constraining the credit rating

Issuer`s failure to timely meet its commitments on series A bonds.

Worsening of the Issuer`s liquidity prompted by turbulence in the financial market, coupled with uncertainty regarding possible refinancing of Issuer`s obligations.

A significant share of issuer`s assets is pledged as security.  

Aggravated issuer`s openness and transparency.

Growing competition in Ukraine`s poultry sector accompanied by national trend of decreasing industry`s profitability.

Issuer`s vulnerability to changes in state agricultural policy.