25th Aug 2006 07:01
Pyaterochka Holding N.V.25 August 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 25 August 2006 Pyaterochka HOLDING n.v. credit rating update Yesterday, Moody's announced a downgrade of the corporate family rating ofPyaterochka Holding NV to B1 from Ba3, with a stable outlook for the rating.Moody's Interfax Rating Agency also downgraded Pyaterochka's national scalerating to A1.ru from Aa3.ru. Moody's cited the increase in leverage which the company experienced as a resultof the merger with Perekrestok as the primary reason for the rating change.Moody's commented in a statement released yesterday, "...the rating downgradeprimarily reflects the increase in debt of the combined entity as compared toPyaterochka's pre-merger metrics...". In addition, Moody's noted that "The rating action takes into consideration thepositive impact of the merger on the company's business profile, notably i)market leadership in a still fragmented market, with strong positions in Moscowand St. Petersburg, ii) the increased customer coverage with its dual-formatstrategy in the food discount and supermarket segments; and iii) the combinedentity's improved ability to capture growth opportunities in Russia's fastgrowing food retail market. In addition, the rating takes into considerationthe company history of strong and consistently growing cash flows." The outlook for the rating is stable, as Moody's "anticipates that the companywill be able to benefit from its strengthened franchise as the largest foodretailer with both discount and supermarket business lines in the Russianmarket, convert its large investment programme into rapidly growing operatingcash flow and significantly improve (its) financial profile within a three-yearperiod, with Debt/EBITDA to be down from its 2006 peak to markedly below 4x in2009." Management has emphasized its commitment to largely de-leverage the mergedcompany, starting from 2007. In addition, on 3 August 2006, Standard & Poorsaffirmed its 'BB-' long-term corporate credit rating for Pyaterochka Holding NV,as well as its 'ruAA-' Russia national scale rating for Pyaterochka's operatingsubsidiary, OOO Agrotorg. Vitaliy Podolskiy, Group Chief Financial Officer, commented: "Although we are clearly disappointed with Moody's decision, we hope to be ableto be in a position to have our rating reviewed by early 2007, on the basis ofthe company's 2006 financial and operating results. In addition, the financial markets have already recognized the improvedoperating and financial profile of the merged business - for example, our recent$800 million syndicated loan was well oversubscribed and our overall cost offunding since the merger is markedly lower. While Pyaterochka Holding does not have immediate plans for new internationalcapital market issues, we believe that Moody's decision should not effect ourability to attract required funding, including the company's plans to enter theinternational capital markets next year, both to further improve its capitalstructure and to continue to fund its ambitious expansion programme." Note to Editors: Pyaterochka Holding N.V. is Russia's largest food retailer in terms of sales.The group has 391 company-managed "Pyaterochka" soft discount stores located inthe Moscow (187), St. Petersburg (185) and Yekaterinburg (19) areas, and 133company-managed "Perekrestok" supermarkets across 14 regions of Central Russiaand Ukraine, including 78 stores in Moscow, as of 30 June 2006. Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 tocreate the clear leader in the Russian food retail market. Pyaterochka's 2005 net sales (pre-merger) reached USD 1,359 million, with grossbanner sales in 2005 of over USD 2 billion. Perekrestok net sales reached USD1,015 million in 2005. Pyaterochka's Q1 2006 net sales (pre-merger) reached USD 439 million, andPerekrestok Q1 2006 sales were USD 323 million. As of 30 June 2006, franchisees operated 479 Pyaterochka branded stores in 20regions of Russia, Ukraine and Kazakhstan. Perekrestok has 10 conveniencestores operated by franchisees in the Moscow area. - End - Enquiries to: Pyaterochka Holding N.V. Investor Relations Tanja Djurdjevic Tel +7 495 724 64 14 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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