OREANDA-NEWS. On 29 May 2008 Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaBBB+ (uaBBB plus) to registered coupon bonds (series C) to be issued by Kiev-based Karavan LLC (`issuer` or `company`). The amount of the issue is UAH130m, with 3-year original maturity. The company`s principal activity is retail trade with foodstuffs and nonfoods at leased commercial premises in Kiev-based Karavan trade and entertainment centre. In the course of analysis Credit-Rating considered issuer`s financial statements for 2004-2007 as well as its other inside information.

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. A plus "+" and a minus "-" signs indicate intermediary categories compared to the standard categories (grades).

Factors maintaining the credit rating

The issuer is incorporated with Karavan group, which companies act as sureties to the upcoming bond issue (of UAH130m); the consolidated income of the issuer and sureties in 2007 amounted to UAH813.1m, with UAH9.8m accounting for the net profit.

Issuer`s performance indicators have improved, specifically the EBITDA increased to 7.9% in 2007 from 2,4% in 2006.

High growth rates of retailing, with such trend expected to be further retained.

Factors constraining the credit rating

Insufficient development of Karavan group`s trade network, which comprises 4 outlets as of Apr. 1, 2008.

Risks imposed by redistribution of cash flows within the group neglecting issuer`s interests.

Issuer`s negative cash flow from operating activities in 2005 and 2007.