Following the results of an annual meeting Standard & Poor’s confirms LenSpetsSMU rating as ‘B’, outlook – stable

11.12.2009

Following an annual meeting held on 3 December 2009 in Moscow the rating agency Standard & Poor’s published a detailed report where, for the 4th time since the beginning of 2009, confirmed CJSC SSMO LenSpetsSMU’s rating as level ‘B’ according to the international scale and ‘ruA’ according to the national scale, outlook – ‘Stable’.

The rating confirmation, which comes just before CJSC SSMO LenSpetsSMU’s bonded loan placement, sends a positive signal to investors, who once again have received proof that LenSpetsSMU bonds meet all requirements for inclusion in the Lombard list of the Central Bank of the Russian Federation.

The main factors influencing the company’s rating, according to Standard & Poor’s, continue to be macroeconomic, such as: several cyclical downturns in real estate demand and lack of transparency and predictability relating to the administrative environment. Insufficient diversification of LenSpetsSMU’s business 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 methods.

At the same time Standard & Poor’s analysts say that LenSpetsSMU’s management remained committed to its conservative financial policy. Moreover, LenSpetsSMU’s share in the St. Petersburg primary real estate market has increased over 2009 and the company’s financial metrics are distinguished favorably against its main competitors’ indices.

Success in refinancing and redemption of financial debt in 2009, according to S&P analysts, has reduced liquidity concerns and improved the company’s financial portfolio. S&P considers that LenSpetsSMU is well-positioned to fulfill its debt obligations in 2010. Moreover, the placement of CJSC SSMO LenSpetsSMU’s bonded loan due in December 2009 will cover the risk of having to refinance until the end of 2010.

S&P press-release says that financial statements made under the IFRS for the 1st half 2009 show that LenSpetsSMU’s creditability indices exceed S&P requirements for this level of rating (‘B’ international scale – LenSpetsSMU’s note), with the index debt to EBITDA at approximately 1.0. At the same time Standard & Poor’s considers these indices adequate for the confirmed rating, taking into account the wider situation in the real estate market.

The “Stable” outlook for LenSpetsSMU’s ratings reflects Standard & Poor’s opinion that despite the continuing uncertainty in financial markets, LenSpetsSMU will be able to refinance its short-term debt obligations.

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 to receive and publish credit ratings from the largest and most conservative international rating agency – Standard & Poor's. At the same time, LenSpetsSMU is currently 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 commitments 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, compared to 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 ZAO SSMO LenSpetsSMU acted as a guarantor, 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 loans 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 deterioration of the economy.

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

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

11.12.2009

The ratings as per international and national scales 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