OREANDA-NEWS. July 31, 2015. RusRating has lowered the credit rating assigned to Kingcoal from "BB" to “B+” on the international scale and from "BBB" to “BB+” on the national scale, in both cases with a negative outlook.

The rating cut is based on loss-making operations, a growing debt burden, high sensitivity to currency risks and insufficient liquidity.

The negative outlook reflects an expected further rise in the Company’s debt burden.

The rating is based on coal assets that include modernised equipment, ties to a major financial-industrial group, and scope for re-financing plus other support from the group and its owners.

Constraining factors include a high debt burden, negative operating profits, a failure to meet sales targets, high currency risk and insufficient liquidity.

About the Company

KingCoal is a private-sector limited liability coal company that operates production facilities in Rostov region (anthracite production at the Almaznaya, Rostovskaya, Zamchalovskaya and Gukovskaya mines) plus Primorye region in the Russian Far East (non-coking coal from the Surazhevski cut). Cyprus-registered Kingcoal Group Limited holds a 90% stake in the Company and the remainder is held by General Director V.G. Pozhidayev. The ultimate beneficiary owners of Kingcoal Group Limited have not been identified.

The Company’s debt burden is judged very high and financial results for 2014 were negative; Kingcoal has reported losses on sales for the past several years. The balance sheet is dominated by non-working assets, including a significant percentage of prepaid expenses; working assets consist mainly of accounts receivable. Most external liabilities are short term and take the form of accounts payable and short-term loans, principally a loan from B&N Bank now held by Rost Bank and re-extended annually. Long-term liabilities consist mainly of loans from the parent company or leasing obligations. Liquidity is insufficient. Risk sensitivity is high.