OREANDA-NEWS. On 19 June 2009 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it downgraded to uaBBB from uaBBB+ (uaBBB plus) the long-term credit rating assigned to coupon bonds (series A, B) issued by Kiev-based Agromat LLC (`issuer` or `company`) for the amount of UAH100m. The outlook on the rating has been changed to negative. The rating has also been placed on Rating Watch List (`RWL`).

This rating action was triggered by company`s eroded liquidity under adverse environment in the financial market and opacity with regard to refinancing of company`s liabilities.

The removal of the rating from the RWL and its further revision is contingent upon timeliness and fullness of issuer`s meeting its commitments on the bond obligations, taking into account possible mutual agreements with the bondholders on the schedule of payments.

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.

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.

The Rating Watch List is intended to inform financial market participants about possible changes of ratings in short-term prospective. The rating placed on RWL denotes that Credit-Rating is currently considering its change as a result of events or ongoing trends, which may negatively affect creditworthiness of a rating`s bearer.

Factors maintaining the credit rating

Issuer`s standing in the market: the company is one of Ukraine`s biggest distributors of ceramic tiles (24% of the market in 2008).

The issuer`s net earnings from sales rose by 30% to UAH670m over 2008, with the EBITDA increased by 37% to UAH141.6m, in comparison with the indicators recorded in 2007.

Factors constraining the credit rating

Company`s eroded liquidity under adversities in the financial market and opacity with regard to possible refinancing the obligations.

Issuer`s negative cash flow from operations during 2005-2008.

The amount of company`s debt burden: as of Dec. 31, 2008 the ratio of net debt to EBITDA calculated for the past 12 months was recorded at 3.2x.

Ongoing negative trends in Ukraine`s real estate sector, coupled with decrease purchase capacity under shrunk population`s incomes.