Agroton received rating downgrade, market capitalization fell by -55.64%
2013-04-15 11:21:03
According to the official information released by Standards and Poor’s Ratings Ukrainian agricultural producer, Agroton Public Ltd. (Agroton) received “CCC” foreign and local currency long-term corporate credit ratings and senior unsecured debt ratings decrease from previous “CCC+”. Ratings were also put on CreditWatch, which means that company’s ratings could be placed even lower in the near future after further review. Ratings were decreased after substantial weakening of company’s liquidity due to significant decrease of company’s cash balances to service coupon payments of a USD 50 M bond, maturing in 2014.
Most of the investments made by the company this year were aimed at refinancing working capital for current and future harvesting campaigns. The next coupon payment of USD 3 M is due in July 2013. Cash balances decreased to USD 6.5 M at March 25, 2013 from USD 20.4 M at Sept. 30, 2012. Moreover, of the USD 6.5 M, USD 4.5 M is kept at the Bank of Cyprus. Access to that part of company’s cash is currently restricted and it is very less likely that that part is not fully recoverable. This is the main reason that there is doubt regarding possibility of making USD 3 M coupon payment.
AgroInvest comment: Market reaction followed immediately with company’s market capitalization decreasing by 55.6% as the company was the volume leader in terms of shares traded on Friday. Company is in high need of refinancing of its current debt as it is not clear how the company will make the upcoming payment.