OREANDA-NEWS. On 06 February 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term counterparty credit rating of uaBB to Sumy-based Sumykhimprom OSJC (`company`). The outlook on the rating is negative. The company`s principal activity is production of titanium dioxide, mineral fertilizers, colorants and other products. In the course of analysis Credit-Rating considered company`s financial statements 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

Company`s strong market positions, which is one of the CIS`s biggest producers of titanium dioxide, mineral fertilizers and other chemicals.

Company`s diversified outlets and significant share of export in the company`s sales structure.

Factors constraining the credit rating

Company`s failure to meet in full its commitments on bonds (the series B bonds offered for repayment in the amount of UAH49.9m have been repaid for UAH45.6m).

Anticipated significant investments and, consequently, increased debt burden, which is associated with necessity for production updating.

Low profitability indicators (the operating profitability has not been in excess of 8% over the past 3 years).

High cyclicality of the sector, which is connected with fluctuations of prices for produce and raw materials, and hot competition in the market.

Limited number of suppliers of raw materials and high specific gravity of company`s foreign currency expenditures for purchase of raw materials under depreciating national currency.