New York, November 19, 2008 -- Moody's Investors Service has today
downgraded the corporate family rating of AOEiE Irkutskenergo
("Irkutskenergo", or "the company") to B2 from B1. At the same time,
Moody's Interfax Rating Agency, which is majority owned by Moody's, has
downgraded the company's national scale rating (NSR) to Baa1.ru from
A2.ru. The ratings are on review for possible further downgrade.
The downgrade reflects the increasing liquidity risks facing
Irkutskenergo. The company may encounter difficulties in making timely
payments to its minorities that voted against the company reorganisation.
Given its short debt maturity profile, the company is continuously
challenged by the refinancing risk and remains fully dependent on its
bank partners' willingness to renew current short-term credit facilities
or open new ones. The company's short-term debt at the beginning of the
fourth quarter of 2008 significantly exceeded the amount of unused credit
lines and available cash. At the same time, the company's cash flow
generation is expected to be further affected by higher financing costs
and by the weakening economic conditions for its major industrial
customers.
Moody's acknowledges Irkutskenergo's efforts to arrange new bank
facilities through tenders, as required by the company's status as a
monopoly business. However, the agency notes the increasing risks of bank
participants reviewing its tender proposals in the current environment,
and hence of delays in the completion of tender procedures and accessing
new bank funding.
Moody's review will focus on Irkutskenergo's ability to follow its plan
to have a number of one-year bank facilities opened and agree on a
long-term bank facility no later than December 2008.
Irkutskenergo's ratings could be downgraded if the company were unable to
(i) follow its plan to strengthen liquidity, (ii) address the payment
requirements of minorities and (iii) prepare fully in December to address
its January refinancing needs.
Moody's last rating action for Irkutskenergo was on 30 October 2008 when
the agency changed the outlook on the company's B1 corporate family
rating to negative due to the increased pressure on the company's
liquidity profile and the company's limited ability to attract long-term
funding under the current credit crunch.
Headquartered in the City of Irkutsk (Russian Federation), Irkutskenergo
was initially an integrated electric utility business focusing on the
Irkutsk region. The company is being restructured, with its transmission
and distribution grid business to be spun off as an independent entity by
the end of 2008. The company has three hydroelectric power plants with an
installed capacity of 9.0GW and 12 combined heat and power plants with a
total capacity of 3.9GW. The company generates approximately 63% of its
2007 RUB28.8 billion revenues from sales of electricity and 30% from
sales of heat. Irkutskenergo's controlling beneficiary shareholders are
the same as those of UC RusAl, the largest aluminium business in Russia
and an international leader in the metals sector. The Russian state --
represented by the Federal Property Agency -- has a 40% stake in the
company. |
