OREANDA-NEWS. RusRating has placed the credit rating assigned to ZAO Likhoborski Avtoservis – "BB" on the international scale and "BBB" on the national scale, in both cases with a negative outlook – on its watch list. This means that the rating and rating prognosis could change (either rise or fall) in response to additional information received from the Company or identified in public sources.

The rating is based on the substantial market value of the Company’s assets, which exceeds its own financial debt and interest obligations plus debt and interest on which it has issued guarantees; close business ties between its owners and BFG-Credit Bank and so a high probability of refinancing in the event on unfavourable macro-economic developments; and the competitive sale price of retail space in the Metromall2 facility.

Constraining factors include a possible decline in demand for commercial real estate in response to a weakening macro-economic environment in Russia; the absence of current operating revenues; the resulting high debt burden; and high currency risk.

The negative outlook reflects the high (in RusRating’s view) likelihood that the project will be suspended in response to current uncertainty in the Moscow market for commercial real estate, plus a low occupancy rate.

About the Company

ZAO LAS was set up in 2002 and owns the 18 800 m2 Metromall2 retail facility in Moscow (Dmitrovskoye hwy. 62) next to the new Verkhniye Likhobory station on the Lyublinsko-Dmitrovskaya metro line, which is scheduled to open in 2016.

The Company’s main assets are the Metromall2 facility and financial investments: loans plus veksels (promissory notes) issued by BFG-Credit Bank. Obligations consist of dollar loans extended by the same bank. As well as its own R879mn in financial debt the Company has guaranteed R2.55bn in bank loans to three other companies. Liquidity is sufficient. Risk sensitivity is very high.

The strategy adopted by the Company’s owners calls for the sale of small blocks of floor space in the MetroMall2 facility up until June 2015 at a price of R262 000 per square metre. This price is competitive and will cover all outstanding debt and interest obligations (including conditional obligations under guarantees).