After the fulfillment of the major part of LenSpetsSMU debt obligations planned to be redeemed in 2009, Standard & Poor’s confirmed the company’s rating once again

02.09.2009

On 1st September 2009, Standard & Poor’s rating agency issued a short rationale where it once again confirmed the rating of CJSC SSMO LenSpetsSMU as ‘B’ rating according to the international scale and ‘ruA’ rating on the national scale; outlook “stable”.

Standard & Poor’s prepared the rationale with a short explanation of LenSpetsSMU credit rating after the company had demonstrated its capacity to fulfill its debt obligations to the creditors in due time and in full. Since the beginning of 2009 LenSpetsSMU has redeemed credits and loans totaling 80 million US dollars including the following:

21.01.2009

CJSC CDR fulfilled its obligations for the 5th coupon payment of 34.0 million rubles in relation to the bonds of 02 series (4-02-13346-J dated 25.05.2006) to the investors in full and on time.

22.01.2009

CJSC SSMO LenSpetsSMU redeemed the balance of the debt under Alfa-Bank credit for the amount of 2.0 million dollars in full and on time.

03.03.2009

CJSC SSMO LenSpetsSMU completed the first in Russia successful novation of Eurobonds (CLN) as a result of which the put option dated 26.04.2009 was canceled and the scheme of notes redemption by installments was established.

20.05.2009

CJSC SSMO LenSpetsSMU made the first installment for CLNs for the amount of 16.67% of the placed notes’ nominal.

03.07.2009

CJSC SSMO LenSpetsSMU redeemed two credits of ROSBANK totaling 166.0 million rubles in full and on time.

08.07.2009

CJSC SSMO LenSpetsSMU redeemed the credit of VTB bank for the amount of 15.0 million dollars in full and on time.

22.07.2009

CJSC SSMO LenSpetsSMU redeemed the second credit, out of two, of VTB bank for the amount of 20.0 million dollars in full and on time.

22.07.2009

CJSC CDR fulfilled its obligations for the 6th coupon payment of 34.0 million rubles in relation to the bonds of 02 series (4-02-13346-J dated 25.05.2006) to the investors in full and on time.

20.08.2009

CJSC SSMO LenSpetsSMU made the second installment for CLNs for the amount of 16.67% of the placed notes’ nominal.

The main factors influencing the company’s rating, according to Standard & Poor’s, continue to be mainly macroeconomic factors, such as: low demand in the real estate market in the Russian Federation and lack of transparency and predictability of the administrative environment. The company's dependence on property development in a single region of Russia and weak liquidity position were also considered as negative factors. The rating agency has evaluated the company’s liquidity on the basis of its in-house rating criteria, according to which the current account balances, deposits and limits opened in banks by the date of the report publication are not sufficient for the redemption of debt obligations within the next 12 months.

At the same time Standard & Poor’s analysts say that over the last few months LenSpetsSMU has made progress in better distributing its debt maturity profile over the past months. According to S&P, LenSpetsSMU will be able to satisfy its needs in refinancing owing to management's demonstrated proactive treasury management, established borrowing relationships, and historically good access to the Russian loan market.

S&P rationale says that preliminary financial statements for I half of 2009 show that LenSpetsSMU’ creditability indexes are higher than S&P’s requirements for this level of ratings (‘B’ international scale – LenSpetsSMU’s note), approximately 1.3 times in the ratio of debt to EBITDA and approximately 50% in the ratio of debt to equity capital. At the same time Standard & Poor’s considers these indexes adequate for the confirmed rating, taking into account impaired liquidity indexes and severe market conditions.

The stable outlook for LenSpetsSMU’s ratings reflects Standard & Poor’s opinion that despite the existing severe conditions of the financial market, LenSpetsSMU will be able to refinance its short-term debt obligations. Moreover, S&P analysts believe that the company’s management will keep financial discipline and use a weighted approach to the schedule of new projects development, taking into account weak demand, that is an important factor for maintaining creditability characteristics complying with the rating level.

A complete version of Standard & Poor’s report is available on LenSpetsSMU’s financial web-site.

NOTE

The current rating of CJSC SSMO LenSpetsSMU: B / Stable / B; ruA.

LenSpetsSMU was the first and remains the only Russian construction company which received and published credit ratings from the largest and most conservative international rating agency - Standard & Poor's. At the same time, currently LenSpetsSMU is the most highly-rated construction company in Russia and Eastern Europe.

The `B' international scale rating means that the company has the capacity to meet its financial commitment on the obligations in full and in due time.

The ‘ruA’ national scale rating shows that the company is characterized by a moderately strong capacity to meet its financial commitments on the obligations in full and in due time, relative to that of other Russian issuers.

CORPORATE CREDIT RATINGS HISTORY

22.12.2006

The rating as per international scale - ‘B’, outlook – stable, the rating as per national scale – ‘ruA-’ were assigned.

The rating for ruble-denominated bonds of CDR (01 and 02 series), where CJSC SSMO LenSpetsSMU acted as a guarantor – rating as per national scale ‘ruA-’ was also assigned.

21.03.2007

The ratings as per international scale (‘B’, outlook – stable) and national scale (‘ruA-’) were affirmed.

17.04.2007

The rating for debenture bond (CLN) as per international scale ‘B’ was assigned.

12.12.2007

The outlook as per international scale was revised from «stable» to «positive».

The rating as per national scale was increased from ‘ruA-’ up to ‘ruA’.

The rating of bonded debts of 01 and 02 series was also increased from ‘ruA-’ up to ‘ruA’.

04.04.2008

The ratings as per international and national scales were affirmed.

07.10.2008

The outlook as per international scale was revised from «positive» to «stable» because of financial crisis and overall economy condition deterioration.

The rating as per national scale was left without alternations.

30.01.2009

In spite of the process of changing the credit-linked note (CLN) parameters, the ratings as per international and national scales were affirmed.

26.03.2009

The ratings as per international and national scales were affirmed.

01.09.2009

After the fulfillment of the major part of debt obligations being subject to redemption in 2009, the international and national scale ratings were affirmed.

CONTACT DETAILS

Mikhail Dukhovny, Director of Corporate Communications Department
Telephone: +7 (812) 348-21-25, e-mail: dukhovny_m@lenspecsmu.ru

Victor Vasenev, Deputy CFO
Telephone: +7 (812) 348-09-95, e-mail: vasenev_v@lenspecsmu.ru