Press Releases / 08.02.2013

Press Release as of 08.02.2013


The ‘A’ rating indicates a high credit standing of OJSC SOLLERS and the bonded loan. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal.

The bonds were placed on May 5, 2010. The amount of issue registered was RUB 2 billion. One bond has a nominal value of RUB 1,000. The issue was assigned state registration no. 4B02-02-02461-D as of 8/29/2008, ISIN RU000A0JQUW3. Term to maturity: 1,092 days.

The bond flotation report was registered on May 5, 2010. The coupon yield is payable twice a year, at a constant rate. The coupon rate 9.25% per annum, with one coupon payment to be effected before retiring the bonds.

The coupon rates may be regarded as moderate. It will be noted that OJSC SOLLERS has never failed to effect coupon payments, benefiting from its strong cash flow generation capacity covering its peak debt loads.

OJSC SOLLERS used the bond placement proceeds for general corporate purposes and for development purposes.

OJSC SOLLERS fully met all the bond buy-back requests on the buy-back offer day (5/5/2012). The Company bought back 1,300,227 (65.01% of the issue). As of 9/30/2012, the outstanding amount was RUB 2 billion.

The bonded loan is maturing 5/1/2013. Apart from paying the nominal bond value to the bondholders, OJSC SOLLERS is expected to pay coupon 6. The Company will use its own funds to retire the bonds. Also, the company may float a new bonded loan covering its debt liabilities (to date, OJSC SOLLERS has issued four registered bond issues for a total of RUB 7 billion). Floating a new bonded loan covering its debt liabilities, the Company will have its short term bond debt replaced with the same amount of long-term liabilities, thus improving its debt structure.

The Company is currently considering and validating its 2013 financial plans. As of September 30, 2012, equity capital of OJSC SOLLERS totaled RUB 7.6 billion. The Company’s retained earnings account for most of the capital (52%) amounting to RUB 3.95 billion.

AK&M Rating Agency rated OJSC SOLLERS, the issuer of bonded loan BO-02, ‘A’ as per the national scale, with a stable outlook. The rating of bonded loan BO-02 is almost completely geared to the issuer’s credit standing.

SOLLERS is one of the leading automakers in Russia. The issuer owns controlling stakes in several vehicle manufacturing enterprises, unites UAZ (Ulyanovsk Automobile Plant), ZMZ (Zawolzhsky Motorny Zawod), SOLLERS Far East and other production assets. SOLLERS Group’s enterprises produce domestic UAZ off-road vehicles, SsangYongs automobiles (South Korea), as well as gasoline and diesel engines ZMZ. SOLLERS is implementing a number of projects in the form of joint ventures, namely: manufacture and distribution of Ford, Isuzu, manufacture of Mazda, Toyota, and leasing services. Besides, the company is developing a dealership chain.

The SOLLERS group is currently operating above the break-even point. In 2012, the overall profit growth trend continued. According to the group’s consolidated financial statements for the first half of the year, profit from operations totaled RUB 3.4 billion, net profit amounted to RUB 2.6 billion (against RUB 897 million for H1 2011). This, implying a considerable increase in annual profits in 2012 against 2011, naturally supports the Company’s rating. In the first half of the year 2012, consolidated debt of the SOLLERS group decreased by 15% to RUB 14.35 billion, continuing the downward trend.

OJSC SOLLERS has taken a package of measures to keep industry-specific risks as low as possible. The Company entered into agreements with foreign car manufacturers in the most promising segments of Russia’s automobile market, resulting in four joint ventures adding considerably to the Company’s model line-up; also, SOLLERS minimized the product obsolescence risk increasing intellectual performance. Implementation of the industrial park concept at ZMZ has started.

Our analysis indicates that OJSC SOLLERS has sufficient cash flows and resources to meet its obligations. We appreciate the Company’s good standing and financial results achieved for rating its bonded loans. The risk of coming across fatal peak loads while repaying the nominal bond value on the loan is insignificant.

The core business of OJSC SOLLERS is managing assets at a number of large enterprises (OJSC ZMZ, OJSC UAZ, SOLLERS Far East LLC). The Company has a good credit history and a decent financial standing. OJSC SOLLERS has placed two interest-bearing bond issues (currently in circulation).

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This press release is based on the statements of assigning credit ratings to OJSC SOLLERS, bonded loans 02 and BO-2.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Company.

AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading system). By a resolution of Russia’s Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.


CJSC Analysis, Consulting and Marketing Rating Agency

ul. Gubkina 3
Moscow, Russia
Press release by: A.V. Yakovenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.