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S&P: Russian Fruit Importer JFC Group Co. Ltd. (CJSC) On Watch Neg On Large Real Estate Investment

February 15, 2008 | Cbonds

MOSCOW (Standard & Poor's) Feb. 15, 2008--Standard & Poor's Ratings Services said today that it placed its 'B-' long-term corporate credit and 'ruBBB-' Russia national scale ratings on Russian fruit importer and distributor JFC Group Co. Ltd. (CJSC) on CreditWatch with negative implications, following the group's large investments into such noncore assets as commercial real estate, which might constrain the group's liquidity.

"The CreditWatch placement reflects our opinion that these investments might undermine the group's ability to raise additional or replacement finance," said Standard & Poor's credit analyst Anton Geyze.

The real estate investments are not operationally linked to the group's core fruit business, and are being segregated into a separate entity for funding and management purposes.

"We will resolve the CreditWatch listing once we receive more details regarding JFC's financial plans and its 2007 operating and financial results," said Mr. Geyze.

We will particularly be looking for transparency in the management and funding of the commercial real estate assets, as well as evidence of continuity in the strategy and operating performance of the core fruit business, which should continue to drive the ratings on JFC.

For the last 12 months ended June 30, 2007, fully adjusted, consolidated debt was $252 million, or adjusted 4.5x EBITDA.

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