Lenta LLC's Credit Rating Raised To 'AA'
OREANDA-NEWS. The National Rating Agency has raised its 'AA' credit rating on Lenta LLC to 'AA'.
The upgrade is driven by Lenta's improved 2013 and 1H 2014 operating and financial performance, as well as growing business volumes and rising profitability, combined with moderate debt leverage. The rating recognizes the company's leading market position, transparent business structure and strong shareholder base. Lenta's shareholders see to it that the company adheres to sound corporate governance standards and manages its risks, logistics operations and budgeting process based on international best practice.
NRA note risks, such as the company's dependence on the macroeconomic environment and consumers' purchasing power, and the challenging competitive environment of the food retail industry. Lenta's high equity immobilization ratio stemming from sizable capital expenses is partially offset by the company's long-term debt maturity structure.
Founded in St. Petersburg in 1993, Lenta specializes in food and consumables retail merchandising. As of Sept. 1, 2014, its retail chain included 87 hypermarkets in 50 cities across Russia plus 16 supermarkets in Moscow and Moscow Oblast with the total trading area of around 571,328 sq. meters. Lenta's retail chain is growing at a brisk pace: 5 hypermarkets and 4 supermarkets opened in 1H 2014 in addition to 21 and 10 respectively in 2013.
Lenta is one of Russia's largest retailers and the second largest hypermarket chain, as measured by 2013 sales. The company operates four master distribution centers.
Lenta LLC is the group's principal asset holder and the sole operating company. It is owned by Lenta Ltd (incorporated in British Virgin Islands), which acts as a holding company and produces consolidated financials according to IFRS. Lenta Ltd's main shareholders are TPG Capital, a large foreign investment fund (38,5%), EBRD (16,6%) and VTB Capital Private Equity (8%). In March 2014, the company raised around US\\$1 billion through an IPO, held without issuing new shares. The company is listed on the LSE and the Moscow Exchange with a free float of around 27.7%.
Lenta's strategy envisages continued intensive growth and doubling the trading area in the next few years.
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