13 Apr 2010 11:36

Moody's assigns (P)B3 rating to MHP's proposed notes

MOSCOW. April 12 (Interfax) - Moody's Investors Service on Monday assigned a (P)B3 rating to the proposed USD-denominated Notes due 2015 to be issued by MHP S.A. (MHP), in line with the corporate family rating of MHP, the agency said in a statement.

The statement said: "The amount is subject to the prevailing market conditions during the placement. The outlook is stable. The proposed Notes are being issued to refinance MHP's existing debt (a part of these Notes is expected to be exchanged for the company's existing 10.25% USD250 million Notes due 2011) and also to fund the company's investments.

The statement said: "The proposed Notes are guaranteed by certain of MHP's Ukrainian operating subsidiaries which are expected to represent the large majority of the company's assets and EBITDA. Moody's has assigned a provisional (P)B3 for these Notes and a provisional LGD assessment of LGD4, based on the assumption that the notes will rank pari passu with other senior unsecured debt of MHP, in particular with the company's existing Notes due 2011.

The statement said: "The provisional rating also factors in Moody's expectation that, in the process of the transaction implementation and following its completion, the company would ensure reasonable headroom under its covenants both under its Notes indenture and bank agreements. In line with the loss-given-default methodology, the ratings and LGD assessment will be finalized upon receipt of final bond documentation, and the confirmation of the issue amount and the final capital structure following the exchange for existing Notes.

The statement said: "The proposed Notes are subject to various restrictions and financial covenants, including limitations on incurrence of indebtedness, limitations on creation and incurrence of certain liens, limitation on certain mergers, asset sales and certain payments. Moody's last rating action on MHP S.A. was implemented on 10 December 2008, when Moody's assigned a B3 corporate family rating (CFR) to MHP S.A., the ultimate holding company for the MHP group, and withdrew the B2 CFR of OJSC Myronivsky Hliboproduct, the key Ukrainian operating company of the group.

The statement said: "At the same time, Moody's downgraded the rating of MHP S.A.'s senior unsecured notes, totaling USD250 million and due 2011, to B3 from B2. Moody's assigned a Baa2.ua national scale rating (NSR) to MHP S.A. and withdrew the A2.ua national scale rating of OJSC Myronivsky Hliboproduct."